The Manhattan real estate bubble appears to have just burst - as 54% of sales in the second quarter closed below asking price, according to Bloomberg. The lowball offers coincide with a significant 17% decline in sales vs. 2017 - resulting in the lowest second quarter tally since 2009.
Manhattan homebuyers are getting bolder these days, demanding bargains or walking away from deals in a market where inventory is swelling. In the three months through June, purchases fell 17 percent from a year earlier to 2,629, according to a report Tuesday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. That was the lowest tally for a second quarter since 2009, when the global recession chilled deals. -Bloomberg
Meanwhile, 37% of sales closed at asking price, however as Bloomberg notes, prices had already been reduced in many cases. Combined, "the share of purchases without a premium was the biggest since the end of 2012," at 91%.
“It’s about perception -- that the market went way up, and it went way up real fast, and it’s not happening anymore, and I am not going to be the fool who gets burned by overpaying,” said Douglas Ellman CEO Steven James, who adds that buyers "do believe that over time, the market will go up, but it’s not going up right now."
Meanwhile, the median price for Manhattan homes sold in Q2 dropped 7.5% to 1.1 million - the second year-over-year decline, according to the firms, while the number of homes listed for sale (6,985) at the end of June jumped 11% over last year; the most in the second quarter since 2011.
The sales slump is likely to continue this year. Contracts to buy homes fell 9 percent from a year earlier to 3,108, the lowest number of pending deals in a second quarter since 2011, brokerage Corcoran Group said in its own report Tuesday. -Bloomberg
“We are in a price correction, there’s no doubt about that,” said Hall Willkie, co-president of brokerage Brown Harris Stevens. “Buyers are very resistant to paying anything that isn’t justified.”
Brown Harris Stevens, in a joint report Tuesday with Halstead, said previously owned Manhattan apartments sold at the biggest discounts off their asking prices in five years in the second quarter.
On the Upper East Side, the median price for three-bedroom resales tumbled 16 percent from a year earlier to $3.075 million, according to the report. Similar apartments on the Upper West Side sold for a median of $3.13 million, down 6 percent. In that neighborhood, the median for two-bedroom resales dropped 5 percent to $1.49 million, and the one-bedroom median fell 4 percent to $785,000. -Bloomberg
“There was a time for many years that if buyers had the money and they were asked to pay 10 percent above comparables, they said, ‘You know what? It will be worth that next year or in two years, why not?’” Willkie said. “That mentality is gone.”