Manhattan’s floundering residential sales market is finally showing some signs of rebounding despite still being in a state of correction, new reports covering activity in the fourth quarter of 2019 are showing.
Douglas Elliman’s report covering the borough showed that while sales fell down annually for the eighth tine in nine quarters sales under $5 million were up since this time last year. Homes above that price were down significantly, by 38 percent year-over-year. Nearly all sales, however — around 95.6 percent of the market in Manhattan — are below the $5 million mark, according to Douglas Elliman data.
Median sales price ($999,000) managed to stay the same, even as inventory was up.
“It truly was a tale of two cities as 2019 came to close, with the SALT and mansion taxes continuing to affect the higher end of the Manhattan sales market,” said Steven James, president and CEO of Douglas Elliman, New York City. “With so much more activity below the $5 million mark, it’s not surprising that the median sales price held steady this quarter. Inventory has been continuing to rise, so it will be interesting to see the impact it may have on luxury sales.”
The firm also showed that Upper Manhattan fared better than the rest of the borough. While prices declined for the third time in four quarters, the lower figures led to more deals, mirroring the overall trend for buyers looking for non-luxury homes.
Throughout Manhattan, listings also stayed on the market l6.5 percent longer, bringing the time up to 99 days, with discounts up slightly, 6.8 percent up from 6.2 percent.
Another Manhattan report by Halstead showed that apartment prices increased by 10 percent since the third quarter, but they were still down 10 percent from a year ago. Average prices of new developments, resale units co-ops and lofts were all down, as were condos, except for studios, which actually saw an increase in price. Interestingly, median prices of new development homes went up slightly, which Halstead suggests is due to middle-of-the-market growth even as high-end closings slow down.
“As we closed out the decade, we saw continued correction mode in the Manhattan market with sellers making necessary reductions to prices, putting them at appropriate levels in the fourth quarter,” said Diane M. Ramirez, chairman and CEO of Halstead. “We expect to see an active start to 2020, as buyers now have a golden opportunity to make a move with the combination of low mortgage rates, competitive pricing and incredible choice in inventory.”
Bond New York seemed to agree in its report, saying that factors including new taxes and newly changed housing legislation, have “influenced consumer sobriety.” As for 2020, Bond suspects there will be more of the same as buyers continue to await the market completely bottoming out.
Jonathan Miller, of Miller Samuel Inc., the author of the Douglas Elliman report, suspects that considering there have already been two years of a softening market, there won’t be significant changes in trends in 2020. The only caveat, he conceded, could be the 2020 elections.
“The one component of uncertainty is the outcome of the election,” he said. “It’ll add another layer of uncertainty to an already challenged market. Uncertainty causes people to hesitate. You may see some pent-up demand at the end of the year.”
Miller also said with 2019’s declines in Manhattan being significantly less severe than 2018’s (1.8 percent compared to 14.2 percent) the industry is in better shape.
“Everyone wants me to say we’re at the edge of an abyss and we’re all going to die, when that’s not going to happen,” he said. “There’s a perception of a larger decline, but that’s because the market has been very polarized (between sales below) and above $5 million.”
Bess Freedman, CEO of Brown Harris Stevens, also thinks the election will be a factor in the market in 2020, but suspects local legislation, like the proposed pied-a-terre tax and other real estate related bills percolating in Albany are even more potentially impactful.
“We need to be careful of all these things we’re piling on the real estate industry,” said Freedman. “We don’t want to hurt everyday New Yorkers that live here.”
Still, she isn’t expecting any major changes in the market, only opportunities for buyers as well as sellers who are competitive in their pricing.
“Is it going to be the best year ever? No. But I feel 2020 is going to be slow and steady.”
Tracking pending sales, which can be a good indicator of where the market is going, Bond found that neighborhoods with the highest spike in activity were FiDi/Civic Center, Battery Park City and Inwood/Washington Heights. The biggest declines in activity were seen on the Lower East Side, in Hamilton Heights and Morningside Heights.
Meanwhile, the firm’s Q4 data suggests it may be an uphill battle for new developments, with supply having increased 17.8 percent since the start of the year and up 4.9 percent since last year. Pending sales were down 22.6 percent since this time last year and up 2.8 percent from last month. The number of new development pending sales was down 14.1 percent since the start of the year.
For resale apartments, breaking it down by neighborhood and unit type, Brown Harris Stevens found that in some areas, prices went up for certain unit types. For East Side resales, the median price for larger apartments (starting at three-bedrooms) fell 16 percent, but this was the only size category to decline over the past year. Meanwhile on the West Side (generally 59th to 110th Street from the Hudson River to west of Fifth Avenue), median resale prices fell for studio and two-bedroom units, while rising for three-bedroom and larger apartments as well as one-bedrooms. For midtown resales, all sizes of apartments had lower median prices than those seen a year earlier, with the biggest declines for larger units. Co-op prices fell for prewar but rose for postwar units. Downtown (14th to 34th Street) only two-bedroom apartments had a higher median resale price than a year ago. In Lower Manhattan (south of 14th), median resale price fell 16 percent for three-bedroom and larger apartments, but studios and two-bedrooms both saw a five percent increase. In Upper Manhattan (generally north of 96th Street on the East Side and 110th on the West Side), only median prices of one-bedrooms went down.