Jonathan Miller, president and CEO of Miller Samuel Inc.
NEW YORK CITY—New York City’s residential sales market is still red hot. In the second quarter, new records were achieved in the average median sale price in Manhattan at $1,189,011 and the average sale price at $2,189,037.
While many sections of the country are dealing with low inventory levels that are causing sale prices to rise and sales totals to fall, New York City’s for-sale inventory, while posting slightly lower totals, is not a major issue going forward according to Jonathan Miller, president and CEO of Miller Samuel Inc., the author of the second quarter Manhattan sales report for brokerage firm Douglas Elliman.
“High sales, record prices, re-sale inventory beginning to slip and still plenty of bidding wars is what we have seen in the second quarter of 2017,” says Miller. He notes that bidding wars while still prevalent in the second quarter, were half the levels seen in 2015.
“The key item from my perspective is greater negotiability at the high end of the marketplace. Listing discounts began rising in the last quarter which means that luxury sellers are becoming more realistic with pricing. Marketing time keeps expanding because buyers won’t budge and that is making for more sales as sellers recognize that.”
The report states that re-sales have been strong, as inventory in that market declined for the first time in three years. New development inventory, however, edged higher, as listing discounts rose to tie the highest level in nearly five years, as sellers increasingly came down to meet buyers on price.
Overall sales in the second quarter rose more than 15% to 3,153, the highest level in three years, Miller tells Globest.com.
“What is clear is that the Manhattan real estate market remains surprisingly robust, especially on the re-sale side,” says Steven James, CEO of New York City, Douglas Elliman. “Prices have moved higher, including two new records set and there has been a sharp rise in sales, as inventory has slipped.”
Miller relates that the New York City residential sales market has been hovering around new records for the past several years. Key metrics from the second quarter Manhattan sales report, besides the record median and average sale price, included the overall residential price per-square-foot rising 0.8% to $1,773 and the number of overall sales rising 15.2% to 3,153 transactions/
He says the second quarter followed strong first quarter sales results in Manhattan fueled by pent-up buyer demand sparked in part by the end of the presidential election campaign as well as fears of rising interest rates.
Other key data points from the second quarter report included a 19% increase in the condominium median sale price, as compared with the second quarter of 2016, to a record $1.875 million. The average sale price of a condo in Manhattan rose an impressive 13.2% to a record-high $3,122,946.
Douglas Elliman reports that the second quarter median sales price for a new development unit shot up 22.8% to $3,306,656. The luxury residential market in Manhattan is very strong, with the luxury median sales price in the borough rising 3.5% to $6,836,269. Based on sales figures and market share, the luxury market threshold in Manhattan jumped 12.7% as compared to a year ago to begin at $4.875 million.
A sign that the New York City residential market is strong and is not encountering some of the issues many markets across the country currently face is that Manhattan can boast a rather healthy inventory of homes for sale. While the overall listing inventory fell slightly (0.6%) to 6,311 in the second quarter, a deeper dive on the inventory front shows that resale-listing inventory slipped 1.3% to 5,290, while new development inventory rose 3.1% to 1,021.
Miller adds that the decline in inventory in the resale market is the first time that metric has fallen in three years. The resale market makes up approximately 83% of Manhattan’s residential market
On the national front, economists are concerned about the low levels of inventory in many markets across the U.S. that caused a third straight month of lower residential sales contract activity (pending sales) in May. National Association of Realtors chief economist Lawrence Yun said it’s clear the critically low inventory levels in much of the country have sidetracked the housing market this spring. “Monthly closings have recently been oscillating back and forth, but this third consecutive decline in contract activity implies a possible topping off in sales,” he said on June 28th when NAR released its pending sales index for the month of May. “Buyer interest is solid, but there is just not enough supply to satisfy demand. Prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast.”
Joseph Kirchner, Ph.D., chief economist for Realtor.com, said that while the pending sales decline is no cause for panic, “Today’s numbers are yet another indication that the lack of homes for sale is having a major, negative impact on the market. The future direction will be brighter if and when we see a significant uptick in inventory, but that unfortunately doesn’t seem to be right around the corner.”