Contracts for the sale of Manhattan apartments fell nearly 30% last month from June 2021, as New York’s housing market began to cool amid fears of a recession and rising mortgage rates.
New York real estate sales prices hit a record high in the first half of the second quarter with rising prices and strong sales, topping the previous record high set in the same period three years ago. year.
The median sale price in Manhattan rose 10.6% to a record $1.25 million, while the number of sales reached the highest total for a second quarter since 2007, with more than 3,800 closures, according to data from Douglas Elliman and Miller Samuel.
The first quarter saw 3,585 sales in the borough, up 45.9% year-over-year and 48.9% above pre-pandemic levels, real estate sales residential loans reaching a record $7.3 billion.
The stock of condominium listings saw the largest increase in the first to second quarter since 2014, while the stock of new development listings rose sharply year-over-year for the third consecutive quarter.
Hike in median rent
Manhattan saw the median rent price hit $4,000 for the first time, according to Douglas Elliman last month, up 25.2% year-over-year from $3,195 in May 2021.
The median rent price in New York is $3,300, 53% higher than the national median of $2,155.
The median price for co-ops at the end of the last quarter reached an all-time high of $865,000, while the median price for condos hit a record high of just under $1.9 million.
However, most of the rise in real estate sales was negotiated at the start of the year, when mortgage rates were not as high.
Manhattan’s real estate market began to plunge in June, real estate agents noted, as stocks and crypto took a hit and rising interest rates began to affect sales.
The slowdown towards the end of the quarter saw inventory rise 15% from the first quarter and at the end of June there were 7,968 active listings.
Oil prices since the start of the second quarter have risen above $100 a barrel as the stock market reaches bearish territory.
Analysts now expect the third quarter to more accurately reflect the mood on Wall Street, posting weaker earnings for the industry, while economic forecasts for a recession also rattle potential home sales.
“This suggests that the current quarter represents a peak period of closed sales activity,” Douglas Elliman’s report said.
“Bidding wars market share fell from the previous quarter’s four-year high of 9.3% to 8.5%, with the average amount of premium paid falling to 4% from 5.3% on the same period.”
The drop in sales in Manhattan is sudden, due to the fact that the market is tilted towards wealthier buyers who are less dependent on mortgages and rising rates.
Cash accounted for 53% of all Manhattan apartment purchases last quarter, with 99.6% of purchases over $4 million being cash at the higher end of the scale, according to Miller Samuel.
New York real estate agents say Manhattan’s wealthiest clients are more sensitive to financial market sensitivity than higher mortgage rates, and are increasingly worried about rising crime and rising rates. higher taxes.
Along with high-end buyers in the financial sector, those working in technology and venture capital are also holding back Manhattan real estate purchases, fearing layoffs and corporate cuts.
Although prices remain high, brokers and loan officers are noticing that buyers are showing up less frequently at open houses or viewings than a few months ago.
A listing that once attracted 31 people to see an open house also saw an open house listed in June, seeing only four people show up, said McKenzie Ryan, one of New York’s top brokers with Douglas Elliman at CNBC.
She believes people “still need space, but interest rates and economic fears are causing people to take a break.”
“The slowdown has accelerated”
Coldwell Banker Warburg President Frederick Warburg Peters said in a market report: “Throughout the second quarter, this downturn accelerated: fewer contracts signed, fewer bidding wars, more prices and a gradual increase in available stocks.
“The gradual downturn in the sales market is manifesting in all boroughs and at all price points across the city,” he said.
Meanwhile, national average “mortgage rates fell for the second week in a row as growing concerns about an economic slowdown and rising recession risks kept Treasury yields lower,” Joel Kan said. , Associate Vice President of Economic and Industrial Forecasting at the MBA on July 6.
“Rates are still significantly higher than a year ago, which is why homebuyer and refinance applications remain depressed,” Kan said.
“Purchasing activity is crippled by affordability issues and low inventory, and homeowners still have less incentive to seek refinancing.”