Surprising Trends Amidst a Slowdown: NYC Market Update Q1 2023

Q1 2023 Field Team Market Update

Sales

• Manhattan real estate sales experienced a significant 38% decline in sales volume in Q1 2023. The combination of high mortgage expenses and elevated property prices has led to widespread affordability challenges for the masses. The drop in sales volume in Q1 2023 follows a 29% decline in Q4 of 2022.?
• With lower sales coming out of the pandemic boom, the pace of the market has been at its slowest rate in two years.
• Sales under $1 million comprised 50% of Manhattan closings, their highest market share in 3 years.
• In the quarter, cash transactions reached an all-time high, accounting for 57% of total sales.?

Prices

• The average price declined by 5% to $1.95 million, and the median sales price dropped 10% to $1.075 million.
• Median sales price slipped year over year for the second time since the pandemic era began but remained slightly above pre-pandemic levels.
• The average discount buyers saw from the initial list price to sales was around 7%, up from 5% in the fourth quarter.
• 5.3% of the closings went to bidding wars. In 2022 bidding wars were happening in 9.3% of sales.

Inventory

• Listing inventory was nearly flat as compared to the year-ago quarter and slightly less than the five-year quarterly average.

Luxury Market

• Sales contracts for properties priced at $4 million or more increased from an average of 16 deals a week in January to 32 deals a week in March
• Q1 2023 data reveals that activity has remained strong at the very high end - top 10% of the market by price.?
• Luxury Contracts increased 34.7% YoY, the biggest increase in any price category.
• Luxury Condos increased an average 20% PPSF YoY and 34% for Average Sales Price.
• Luxury Co-ops increased an average of 27% PPSF YoY.?
• Cash deals hit all-time records: 75% of sales over $5 million were all cash.?

The market continues to transition out of the pandemic-era boom a year ago with lower sales and modest inventory growth as mortgage rates are more than double last year’s.

DJIA vs Manhattan Apartment Sales

Interesting to see the decoupling of the historically pretty strong correlation between the Dow Jones Industrial Average and number of apartment sales in Manhattan.

Manhattan Population Change vs Other Metropolitan Counties

A lot of the growth was international migration, Bloomberg noted, but net migration to Manhattan from inside the U.S. was also up — 2,908 people in 2022, compared to a loss of 98,566 in 2021.

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