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Apartment: People were alarmed by the sharp 29% decline in apartment sales in Manhattan over the fourth quarter.
Fears that the market will stall due to buyers’ and sellers’ anxiety owing to the status of the economy and interest rates have been raised by the decline.
The news
2,546 sales were made altogether in the fourth quarter, per analysis by Douglas Elliman and Miller Samuel.
Even though the numbers were good, they were 3,560 less than the year before.
The pandemic’s peak has also been the largest since its apex in the third quarter of 2020.
However, the median price did drop by 5.5%, marking the first price drop since the beginning of 2020.
Market
The real estate market in Manhattan has finally recovered from the devastating effects of the pandemic, but the drop in sales and prices raises some concerns about potential new problems in 2023.
The following factors have had a significant impact on the Manhattan real estate market and are probably going to play a role this year:
- Rising interest rates
- A weaker economy
- A declining stock market
Concerns
Analysts believe a prolonged stalemate between buyers and sellers is the most significant concern.
There won’t be buyers until prices fall since sellers won’t offer while costs decline.
The CEO of Miller Samuel, an appraisal company that offers market research, is Jonathan Miller, who commented on the issue.
“I could see the market moving sideways, with some modest declines in some sectors,” said Miller.
“And it could weaken further if there is the backdrop of recession and job loss.”
Inventory
Despite declining sales and prices, inventory is still low because some sellers are stalling their listings.
After the fourth quarter, there were 6,523 units still available, according to the report.
Although there was a 5% increase, the numbers are still below the historical average of close to 8,000.
Analysts predict prices won’t decrease enough to entice buyers waiting for reductions because inventory hasn’t significantly increased.
In contrast to the third quarter’s 4.1%, according to Serhant, there was a 6.5% difference between the initial list price and the sales price.
According to Jonathan Miller, as borrowing costs increased, more Manhattan buyers chose to make all-cash acquisitions.
The deals represent the highest proportion of sales ever: 55% for the fourth quarter.
Read also: Apple and Tesla stocks drop in 4th quarter
Luxury units
Still making up the vast bulk of the market are luxury and high-end apartments.
They comprise the top 10% of the New York real estate market.
Despite a dip in the general Manhattan market, the median sales price for luxury apartments rose by 4% in the fourth quarter.
Additionally, since 2019, the median price for high-end and luxury apartments has climbed by 21%, which is twice as much as the whole market.
2023 outlook
The network of freshly formed and ongoing alliances predicts a sluggish first quarter.
According to Brown Harris Stevens, only 2,312 contracts were signed in the fourth quarter, a decrease of more than 43% from 2022.
Meanwhile, Serhant says that this quarter was the worst for signing new contracts in the last ten years.
“Contracts signed are a timelier indicator of demand and registered one of the slowest finishes to any year since 2008,” said Brown Harris Stevens.
Brokers are nonetheless optimistic, as many believe this year will deliver a pleasant surprise.
They cited the rates’ recent stabilization and shoppers’ ability to get deals in a market that is currently softening.
Deals
Due to the frequency of year-end deals, John Gomes, the Eklund Gomes team co-founder at Douglas Elliman, said December was “on fire.”
“It really caught us off guard,” said Gomes.
“Things really turned around in December.”
John Gomes claims that a shopper paid $20 million for a townhouse in Greenwich Village even though it wasn’t for sale.
Additionally, he said that a real estate investor submitted offers for particular flats in the development, which appeared to be accepted today.
Foreign influence
Gomes attributed the growth in sales in December to the influx of overseas clients, many of whom began returning to New York in December.
Travel restrictions worldwide are gradually easing, and the dollar value is somewhat starting to fall.
Brokers claim buyers returned in December, mostly from China and the Middle East.
Brokers claim that purchasers are paying cash and taking advantage of lower costs to avoid rising interest rates.
To sell any remaining apartments, developers of new apartment buildings are likewise decreasing prices.
“Developers are being realistic, they’re making concessions on price and closing costs,” said John Gomes.
“I feel optimistic about the coming year.”
Reference:
Manhattan apartment sales plunge in fourth quarter as brokers fear a frozen market
