Home News ‘Fewer signed contracts, fewer bidding wars’: A slowdown in Manhattan real estate may be a grim warning for the U.S. housing market

‘Fewer signed contracts, fewer bidding wars’: A slowdown in Manhattan real estate may be a grim warning for the U.S. housing market

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First, the good news.

The average selling price of residential real estate sold in Manhattan rose to a record high in the second quarter, rising 10.6% annually to $ 1.25 million. Meanwhile, average selling prices have reached the third highest record ever. report Real estate appraiser Miller Samuel Inc. and real estate agent Douglas Elliman said this week.

“Sales have increased to the highest total in the second quarter since 2007,” the report said. “Cash buyers’ market share has recovered from the lowest recorded five quarters ago and has risen to the third highest tracked.”

The bad news is that median co-operative and condominium sales hit record highs in the second quarter, but co-operative and condominium sales contracts fell nearly 30% year-on-year to 1,318 in June. became. “This suggests that this quarter represents a peak period of closed sales activity,” the report said. “The bid war market share fell from a four-year high of 9.3% in the previous quarter to 8.5%, and the average premium paid fell from 5.3% to 4% over the same period. ”

Frederick Warburg Peters, President of Coldwell Banker Warburg, dim the outlook for Manhattan’s real estate market in his own second-quarter market report released this week. “Through the second quarter, that slowdown has accelerated: fewer signed contracts, fewer bid wars, more price cuts, and a gradual increase in available inventories,” he writes. “The gradual slowdown of sales markets is emerging in all provinces and price ranges in the city.”

“”“The gradual slowdown of sales markets is emerging in all provinces and price ranges in the city.”

— Frederick Warberg Peters, President of Coldwell Banker Warburg

The cold market and soaring prices are double-edged swords. Rising interest rates, fears of a recession, and people immersing themselves in savings when inflation reaches its highest level in 40 years are all preventing people from buying a home. Because they spend a higher portion of their income on rent.

The median monthly rent for New York City is $ 3,300, 53% higher than the national median of $ 2,155.Indeed, one real estate agent these days Told MarketWatch The New York City rental market was “nuts.”

Jeff Tucker, Zillow’s Senior Economist, said: “The volume of contracts signed for the most expensive homes in Manhattan is still increasing every month, but the opposite is true for the most affordable homes. You may wish to move, especially if you refinance in the last two years. Existing mortgage owners of sexuality are considering mortgage rates starting at 5 instead of 2. This puts pressure on both buyers and sellers. “

At its last point, Manhattan is the epitome of a national phenomenon. Affordable prices across the country have reached their lowest levels since 2007. Mark Fleming, Chief Economist of Title Insurance Company First American Financial Corporation, I have written In a recent memo. “For homebuyers, there are several options to mitigate the affordable losses caused by rising mortgage rates and home prices,” he said. “One way to offset the decline in affordability is to increase, if not more, household income.”

Still, rising home prices are trapping millions of people who aren’t making money. Manhattan salary From the housing market. According to Zillow, the median home price is $ 349,816. It’s a small amount by Manhattan standards, but it’s high considering that prices have risen by nearly 21% compared to last year, well above wage inflation. 5% per year.. Applying the context of home prices in these countries, the average annual income in the United States is $ 53,490.

“”“The market is chilling as supply is starting to outpace demand. This is the beginning of a welcome change for today’s buyers.”

— Jeff Tucker, Senior Economist at Zillow

“A sharp rise in mortgage rates should accelerate market rebalancing by reducing demand both in New York City and across the country,” Tucker said. “Monthly mortgage payments continue to grow, which eases housing competition as some buyers are priced from specific markets. National pending sales are increasing monthly. But the new list is growing faster and the active list is in stock. “

Another silver lining: “May is one of the busiest months to buy a home, so pending sales are up, but lower than at the same time last year,” Tucker added. I did. “The market is chilling as supply is starting to outpace demand. This is now the beginning of a welcome change for buyers, but so far it has been the most affordable competition in 15 years. It’s like a silver lining that indicates intensification, so buyers are less likely to face competition, but their purchasing power is declining. “

Of course, Manhattan is a unique market, with prices and home ownership (24% vs. 65% nationwide) “totally different” from other countries, Realtor.com Chief Economist Daniel Hale told MarketWatch. Told. .. The city emptied during the early days of the pandemic, providing some value to future buyers, but recovered last year.

According to Hale’s research, sales volatility in New York City’s metro area is significantly lower than in other metro markets, but price volatility is actually average, except in bright red markets such as Miami and Las Vegas. It’s slightly higher than the metro. “Price volatility is a bit surprising and can be attributed to the size of the metropolitan area. This gives us different individual prices, so the median is the effect of changes in the combination to be sold. It will be easier to receive. “

But in New York, “buyers are particularly adaptable to economic and financial market conditions,” she added.

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