Manhattan apartment sales fell 30% in June, but prices are still high

Contract sales of Manhattan apartments fell by nearly a third in June as the city’s ablazing real estate market began to cool down amid fears of an economic recession and plunging stocks.

Real estate in New York was in shambles during the early spring, with soaring prices and solid sales. Average sales price for the second quarter rose to a record $1.25 million, according to data from Miller Samuel and Douglas Elliman. The number of sales — which topped 3,800 — was the highest total for the second quarter since the 2007 housing boom.

However, most of those deals were negotiated in the early part of the year. Real estate brokers and analysts say the Manhattan market took a sharp downward turn in June, as stocks and cryptocurrencies fell, interest rates rose and economists began discussing the possibility of a recession.

Contract sales for Manhattan co-ops and condos fell 30% in the quarter compared to June 2021, according to Samuel Miller and Douglas Elliman.

“During the second quarter, this slowdown accelerated: fewer contracts signed, fewer bidding wars, more price cuts, and a gradual increase in available inventory,” Coldwell Banker President Frederic Warburg Peters wrote in a market report. “The gradual slowdown in the sales market is manifesting in all neighborhoods and at all price points across the city.”

Manhattan’s decline was particularly surprising given that the market tends to be more affluent buyers who rely less on mortgages and higher rates. In the second quarter, 53% of all apartment purchases in Manhattan were in cash. At the higher end is even higher — 99.6% of purchases over $4 million were in cash, according to Jonathan Miller, Miller Samuel CEO.

Brokers say affluent buyers in Manhattan are more appalled by stock market dips and cryptocurrency losses than by rising mortgage rates. Added to this are persistent concerns about crime in New York and high taxes.

“This is a market in transition,” said Bess Friedman, CEO of Brown Harris Stevens. “Buyers are in the driver’s seat at the moment. There is a lot of uncertainty and a lack of confidence.”

Prices haven’t started to fall yet – at least not on a large scale. But brokers say the presence of buyers for open houses and multiple bids has evaporated. McKenzie Ryan, a prominent New York realtor with Douglas Elliman, said one of her clients is a Manhattan family with a child and she was looking for more space on a budget of about $4 million.

“They just decided to stop their research completely,” Ryan said. “They still need the space, but interest rates and economic concerns are causing people to stop.”

Buyers aren’t showing up for open houses or shows like they were even in April. She said she had a list that month that attracted 31 people to the open house. When I held an open house for a similar listing and similar price point in June, only four people showed up.

Besides finance buyers wary of financial markets, workers and tech and venture capital executives in Manhattan are also retreating from real estate, fearing layoffs and cost cuts.

“My tech clients are now preparing for whatever happens,” Ryan said. “Some people have seen a huge loss of wealth since the beginning of the year.” Ryan said that when sellers now price their listings, they can’t use comparable prices from earlier in the year. Some are discounting it up to 10% compared to early 2022, she said, but it all depends on the apartment.

“There is not enough data on the market at the moment,” she said. “It’s moving and changing very quickly.”