Manhattan Sales Prices Reach Record Low Levels in Q3 2019
Sales and home prices declined sharply in Manhattan’s residential market during the third quarter of 2019, a drastic change from the previous quarter. The 14.1 percent decline in prices is the biggest drop the borough has seen since 2010, during the aftermath of the financial crisis. These results came directly after the market saw high sales and price increases in Q2 before NYC’s mansion tax was implemented.
A recent Manhattan industry report found that the average sales price for condos and co-ops in Q3 was an estimated $1.6 million, a significant 21 percent decrease from the previous quarter and a 14.1 percent drop from the $1.9 million recorded in Q3 of 2018. Only 2,562 sales were closed during the quarter, a 13.4 percent decrease from Q2 and a 14.2 percent year-over-year decline. And there were 7,352 active listings for condos and co-ops during the third quarter, a 6.2 percent increase from the same time last year.
Manhattan’s luxury market saw a particularly steep decline in home prices. The average price for the quarter was about $6.3 million, a 27 percent drop from the previous quarter and an 18.9 percent decrease from the $7.8 million recorded during the same time last year. The median sales price dropped 22 percent from Q2 and 17.3 percent year-over-year, to an estimated $4.8 million. Q3 marked the eighth time in nine quarters that the median sales price saw an annual decline. And during the third quarter, only 261 sales were closed, compared to 297 closed last quarter and 299 closed in Q3 of 2018.
Along with the significant drop in sales, the luxury market’s listing inventory saw its biggest increase in 5 years. There were 1,951 active listings recorded in Manhattan during Q3, a 41.3 percent increase from the second quarter and a 33.2 increase year-over-year.
The effects of declining sales volume and prices Manhattan experienced in Q3 are partly due to the new mansion tax, which went into effect on July 1. The tax imposes a 1 percent surcharge on NYC homes worth $1 to $2 million, and charges higher taxes for pricier homes. The highest tax is 3.9 percent, designated for properties worth at least $25 million. The market saw a high influx of buyers rushing to close deals before the tax was implemented, which contributed to Q2’s high performance. Now that the tax is in effect, the market has been seeing lower demand and higher inventory in the past few months.
Another reason behind declining prices is the high influx of apartments entering the market, particularly luxury listings. With almost 2,000 homes listed, the supply of high-end properties has reached its highest level since experts began recording this inventory data 15 years ago. Due to oversupply, active listings throughout the city are more frequently getting price reductions to attract buyers.
With lower prices and high supply, Manhattan’s residential market is currently giving homebuyers the advantage. The spike in inventory means that buyers currently have more options than usual, and low demand indicates less competition in the market. As home prices remain at record low levels, those interested in buying an NYC home should make a move now before they start to rise again. For information about current active listings in the NYC area, visit the Elegran sales page or contact an agent today.