Real estate in Manhattan is currently a 'seller's market' with rising inventory and falling prices.

• The decrease in Manhattan home prices is due to the increase in the number of apartments available for purchase, which are also taking more time to be sold.
• As the gap between buyer and seller expectations continues to narrow, more deals are closing.
• High rents in Manhattan are driving sales as many potential buyers who were delaying their purchase decisions are now opting to buy.

New reports indicate that Manhattan's apartment market is shifting towards buyers, with a decline in prices and an increase in inventory during the second quarter of 2024.

According to a report from Douglas Elliman and Miller Samuel, the average real estate sales price in Manhattan decreased by 3% to slightly over $2 million. Additionally, the median price dropped by 2% to $1.2 million, and for the first time in over a year, the prices of luxury apartments also decreased, as stated in the report.

The decline in prices is due to the increase in the number of apartments available for sale in Manhattan, which are taking longer to sell. Currently, there are over 8,000 apartments for sale in Manhattan, which is higher than the 10-year average of approximately 7,000, according to Jonathan Miller, CEO of Miller Samuel, a real estate appraisal and research firm.

According to Brown Harris Stevens, Manhattan's 9.8-month supply of apartments for sale indicates that it would take 9.8 months to sell all of the apartments on the market without any new listings. The report states that any number over 6 months signifies an oversupply of apartments and a buyer's market.

Despite the national real estate market's continued tight supply, Manhattan's falling prices and rising unsold apartments stand in contrast. Brokers and real estate analysts argue that the strong post-Covid prices in Manhattan were unsustainable, and both buyers and sellers are now adjusting to a higher interest rate environment.

""At a certain point, buyers and sellers can only wait so long before they feel compelled to make a move, according to Miller," said Miller."

The report by Douglas Elliman and Miller Samuel shows that there were 2,609 sales in the second quarter, which is a 12% increase from the previous year. This marks the first sales rebound in two years, indicating that the gap between buyer and seller expectations is narrowing.

According to Frederick Warburg Peters, President Emeritus of Coldwell Banker Warburg, New York's real estate market started to pick up in the second quarter of 2024, after being sluggish in the first quarter. Deals in all price categories began to surface.

Despite the high rents in Manhattan, they are still contributing to sales. In May, the average apartment rental price was over $5,100 a month, and rents typically increase in the late summer. Potential buyers who have been waiting for the sales market to improve in rentals are now deciding to buy, hoping that interest rates will decrease at the end of 2024 or early 2025.

Miller stated that high rents could have encouraged people to enter the sales market if they were hesitant.

Manhattan real estate is less affected by mortgage rates compared to the rest of the country, as most sales are in cash. In the second quarter, 62% of deals were all cash.

Despite a decline in prices for all segments of the Manhattan real estate market, the high end remains the weakest, as the wealthy delay their purchases until after the election uncertainty subsides. According to Miller Samuel, the median sale prices in the luxury segment, or the top 10% of the market, fell 11% in the second quarter. Additionally, the listing inventory of luxury apartments increased by 22%.

""This weakness could signal the start of a trend or be a one-time occurrence, as Miller stated. We must wait and see what unfolds in the second half," said Miller."