Last week, Zerohedge readers learned that Manhattan’s luxury residential market continued to deteriorate, as homes sold in February stayed on the market for the most extended period since 2012. Now, a new report from Olshan Realty gives us insight into sluggish sales, which data cited from the report reveals demand continues to plunge.
Olshan Realty told The Real Deal that total luxury Manhattan sales for 2019 are 229. The report said the number represents a 19% drop versus the same period in 2018 when 282 properties went under contract, which was 15% lower than 2017 sales.
It appears that sellers in the market are not reducing their asking prices quickly enough to meet the demand of buyers. Most likely explaining why 1Q19 days on the market surged to 516, up from 469 in 2018 and 390 in 2017.
“In my opinion, the luxury market continued to scream: OVERPRICED!!!!!” wrote, Donna Olshan, the President and sole owner of Olshan Realty Inc. She added that the plunge in interest rates might generate some sales but doesn't think the market will recover in 2Q.
The index of Manhattan home values, which is compiled using closed purchases, was down 4.3% from February 2018 - a change that is "eyebrow-raising" according to Grant Long, the senior economist at StreetEasy.
“With a strong economy and home-shopping season right around the corner, plenty of New Yorkers are well-positioned to buy this spring. However, many are willing to walk away from deals that just aren’t financially attractive and continue renting instead — creating a market poised to punish sellers who don’t price their homes sensibly. When the inevitable wave of new inventory hits the market this spring, interested buyers should expect to see an uptick in price cuts as the market forces ambitious sellers to accept reality.”
Long also expects inventory which is up 12% from last year, to reach a record this spring, telegraphing even stricter times for sellers in the quarter ahead.
Recall, we reported in early January that the 2018 trend of tumbling Manhattan home prices was extending into the new year.
After Manhattan real estate closed 2018 as the worst year since the Great Recession, the median sales price for Manhattan apartments continues to decline into 2019, with price tumbling below $1 million for the first time in three years, as sellers are forced to discount price amid a flood of inventory.
To simply condense all the information above, the Manhattan residential real estate market is experiencing a turning-point that could point to much lower prices in the coming quarters.