Manhattan flat sales drop in the fourth quarter as dealers worry about a frozen demand

January 5, 2023: -Manhattan apartment sales decreased by 29% in the fourth quarter, sparking is afraid of a frozen market in which buyers and sellers remain on the sidelines because of economic and rate concerns.

According to Douglas Elliman and Miller Samuel’s suggestion, 2,546 sales in the quarter were down from 3,560 last year. During the deep pandemic, the decline was the biggest since the third quarter of 2020.

Prices also decreased for the first time since 2020, with the median price down 5.5%.

The declines in sales and prices mark the end of the zooming comeback in Manhattan real estate following the worst days of the pandemic and increase fears of continuing weakness into the recent year. Surging interest rates, a weaker economy and a decreasing stock market, which has an outsized effect on Manhattan real estate, are all to weigh on the market.

Analysts stated that their big worry is a prolonged standoff between buyers and sellers, with sellers unwilling to list between the decreasing prices and buyers pausing their searches until costs decrease further.

“I could experience the market moving sideways, with a few modest declines in some sectors,” stated Jonathan Miller, CEO of Miller Samuel, the promotion and market research company.

Even as prices and sales drop, inventory remains tight as sellers hold off on listings. The report states that there were 6,523 flats on the market after the fourth quarter, up 5% from the previous year but still well below the historical average of nearly 8,000. With a significant increase in inventory, analysts state that prices are likely to fall enough to lure back many buyers waiting for discounts. The average value from the initial list price to the sales price was 6.5%, up from 4.1% in the third quarter, the Serhant state.

According to Miller, rising interest rates have also moved more Manhattan buyers into all-cash deals, accounting for 55% of every sale in the fourth quarter, the increase on record.

As the recovery, the high-end and luxury segment remains the strongest. Median sale prices for luxury apartments, defined as the top 10% of the market, increased 4% in the fourth quarter, compared to a downfall in the broader Manhattan market. Median costs for luxury apartments are increased by 21% compared to 2019, twice the increase in the overall market.