Turning Point for Manhattan Real Estate?

If you go through the usual quarter end reports about the Manhattan real estate market you might conclude that everything is fine. You will see, for example, that prices were up a bit in the second quarter, by low to mid-single digit percentages. Closed sales were up 9% over last year and 14% over the first quarter. Inventory levels were down slightly over this time last year. It all seems to paint the picture of a healthy, but not overheated market.

 The truth unfortunately is that the picture is not as bright as it appears at first glance. The sales and price information reported for the second quarter reflect activity in the market from earlier in the year due to lags between contract signings and closings. If you look at more current data, such as contract signings and inventory levels, the warning signs are evident. Inventory levels are now 26% above the first quarter. Absolute levels aren't too bad, but the trend isn't good.

More troubling is the slowdown in contract signings, which were down 18% over last year. The real problem is that nearly all of this decline came in the period since mid-May. During April and early May, activity levels were almost keeping pace with last year's very busy market. Starting in mid-May, activity levels started falling well below last year's pace. The picture we are seeing is that interest rate increases, stock market wobbles, crypto collapses and heightened recession fears have shaken the confidence of buyers.

 As far as the impact of all this on prices, we don't have any good data. Anecdotally though, I can tell you that I am seeing lots of price reductions and less activity at open houses. Unless something unexpected happens, I think that the second half of this year will show some price declines to accompany the reduced activity levels we are already seeing.

 I think buyers are now in a position to be a little pickier and to negotiate a little harder. Sellers are probably well advised to be realistic about market conditions. During previous periods of market weakness, I have seen sellers who were slow to react chasing the market down. Not the right way to get the best possible sales price.

 If you would like to discuss any of this, or if there is anything I can do for you, please feel free to reach out. You can follow me on LinkedIn, Facebook and Instagram for my latest thoughts on developments in the NYC real estate market.