As Manhattan Housing Market Slumps, 54% Of Quarterly Sales Below Asking Price

The Manhattan real estate bubble appears to have just burst - as 54% of sales in the second quarter closed below asking price, according to BloombergThe 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.”

Comments

nope-1004 Thu, 07/05/2018 - 19:27 Permalink

But, Linda Green and all......

Bankers blew this bubble up and were accommodating to lend on the way up, as it made their balance sheet better too, but will they be as nice when prices start to get back down to real levels?  Will they allow prices to actually decline?

Housing is WAAAAAY over priced.  Cheap and easy credit have been the main causes of the grand flip by idiots thinking someone more stupid than themselves will pay a premium for their pad, just cuz.  Many are going to be wiped out.

CheapBastard nope-1004 Thu, 07/05/2018 - 19:37 Permalink

As long as banks continue to get FREE money from the fed, no reason for them to foreclose. It's not like the late 1980's where they foreclosed thousands of houses, reduced the prices and got them off the books. Also the AG (Morganthau SP?) indicted over 700 financial fraudsters. The recovery was complete by 1991.

This time massive NINJA loans, few foreclosures, free fed money and zero fraudsters went to jail. also, Bush and Obama handed Trillions to banks on the backs of American taxpayers and via the "printing press.".

So, time will what path this will follow and see if they let this nonsense correct. My guess is at least 50% RE correction is due in many USA locations.

BTW, this is from 2007. My friend in NYC tells me it's higher now:

How much does a parking spot cost in New York City?

According to Miller Samuel, the average parking space costs $165,019, or $1,100 per square foot, close to the average apartment price of $1,107 per square foot. Those are averages, of course. A $200,000 parking space is about $1,333 per square foot.Jul 12, 2007

In reply to by nope-1004

Endgame Napoleon Quantify Thu, 07/05/2018 - 19:48 Permalink

Someone posted a photo of Lauren Bacall from the early Sixties, posing with her daughter with Humphrey Bogart who looked just like him. They were in her NYC apartment. Wonder if celebrity apartments, even, cost over $3 million in the early Sixties? If a Manhattan apartment cost $3 million, does a house cost $30 million? 

In reply to by Quantify

TeethVillage88s Thu, 07/05/2018 - 19:39 Permalink

OT, but just as important believe me (lol). Aye, how do we know with all this technology that it was ah natur-ral?

https://www.wday.com/news/4468792-ed-schultz-local-and-national-broadca…

In 2004, Schultz took his radio show nationwide. Then in 2009, he moved to national television, becoming a prime-time progressive voice on MSNBC.

Schultz parted ways with MSNBC in 2015, starting his job at RT America, formerly called Russia Today, in early 2016.

ThrowAwayYourTV Thu, 07/05/2018 - 19:56 Permalink

Who wants to live in a shit hole like a city? Hell! You can live on a crystal clear lake and work off your laptop for 1/4 the money it takes to live in the middle of a polluted over crowded city rat hole.

 

MuffDiver69 Thu, 07/05/2018 - 20:17 Permalink

But what will the property tax collectors do now...Awesome news though. By about mid 2019 I expect entire blue states to collapse from the tax reform and the young folks might be able to afford a decent walk in closet for a home

Yog Soggoth Thu, 07/05/2018 - 20:39 Permalink

John Podesta: I remember running as a kid and coming back to running in my late 30s. By that time, I had three kids and my basic exercise was chasing them around. Sorry that copy and paste did not work. Let me try again. Ronald B. Scott (later a biographer of Presidential candidate Mitt Romney). Sorry, I have multiple tabs going. https://imagesvc.timeincapp.com/v3/mm/image?url=https%3A%2F%2Fpeopledot…     Laughing in NYC = People magazine.

Boobsalot Thu, 07/05/2018 - 21:10 Permalink

Doesn't sound like much of a decline to me.  A small number of properties sold below the asking price -- OMG, it's the end of the world.

New York City and especially Manhattan have extremely complex population and living patterns.  Wages and salaries are higher than normal, often much higher, which causes people often to pay much more than usual for their housing.  People share apartments for years under conditions that most elsewhere would consider unacceptable.

And now the subways are really collapsing, which keeps more people staying in Manhattan who would rather commute from somewhere else.

 

 

khakuda Thu, 07/05/2018 - 22:01 Permalink

Ah, NYC. You buy a 1 or 2 bedroom for $1 - $2 million, for the privilege of living in a small, noisy place and paying between $40,000 and $60,000 a year on taxes and maintenance/common charges and an additional 4% tax on all of your income.  No garage, small unworkable kitchen, crappy AC, the honor of doing your laundry in the basement or paying someone else to.  

Seriously, the apartments should be free. 

space junk Thu, 07/05/2018 - 22:38 Permalink

Why the fuck do 99.999999999% of us give a flying fuck what they have to pay in Manhattan?   Surely there's a local 'Chip and Joanna' Schwartzenbergstein to help guide the buyers through the difficulties. 

 

PLEASE jack up the housing costs there.  Just a little gift for the libtivists there which is 100 percent of the population.  Boo fucking hoo. 

Farmer Joe in … Thu, 07/05/2018 - 23:07 Permalink

54% are below asking price..?!?

Omg, the sky is falling.

While I do believe weakness is creeping into the market, that is hardly an alarming stat. Sellers often price a bit above the price they actually hope to get.

If this 54% number is a big deal, then I find the previous numbers that were (presumably) much higher to be the real alarming statistic. 

Singelguy Farmer Joe in … Fri, 07/06/2018 - 07:26 Permalink

The significance of that 54% number is that many of those properties had already been reduced in price prior to the sale AND that no one is paying a premium above asking price. So yes, a shift is definitely underway. Whether that shift turrns into a crash remains to be seen. However, it is certain that as interest rates rise, prices will drop further.

In reply to by Farmer Joe in …