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Manhattan apartment sales contracts plummeted nearly one-third in June as the city’s scorching real estate market began to cool amid fears of a recession and low inventories.
Real estate in New York was weeping until early spring with high prices and strong sales. Median selling prices rose to a record $ 1.25 million in the second quarter, according to data from Miller Samuel and Douglas Elliman. Sales exceeded 3,800, the highest total in the second quarter since the 2007 housing boom.
However, most of those deals were negotiated earlier this year. Brokers and real estate analysts say the Manhattan market fell sharply in June as stocks and cryptocurrencies fell, interest rates rose, and economists began to discuss the possibility of a recession.
According to Miller Samuel and Douglas Elliman, Manhattan co-operative and condominium sales contracts fell 30% this quarter compared to June 2021.
Coldwell Banker President Frederick Warburg Peters said in a market report, “Through the second quarter, fewer contracts were signed, fewer bid wars, more price cuts and gradual inventories accelerated the slowdown.” Said. “The gradual slowdown of sales markets is emerging in all provinces and price ranges in the city.”
Manhattan’s decline is particularly abrupt, given that the market is biased towards high-end, wealthy buyers who are less dependent on mortgages and rising interest rates. In the second quarter, 53% of all apartment purchases in Manhattan were cash. According to Miller Samuel CEO Jonathan Miller, it’s even higher at the high end, with 99.6% of purchases over $ 4 million in cash.
Wealthy buyers in Manhattan are more surprised by the decline in the stock market and the loss of cryptocurrencies than the high interest rates on mortgages, according to brokers. On top of that, concerns about crime and high taxes in New York continue.
“This is a transitional market,” said Bess Freedman, CEO of Brown Harris Stevens. “Currently, the buyer is in the driver’s seat. There is a lot of uncertainty and only weak confidence.”
Prices haven’t started to fall yet — at least not wide. But according to brokers, buyers’ attendance at open houses and multiple bids have almost disappeared. Douglas Elliman’s top New York broker, Mackenzie Ryan, said one of her clients was a Manhattan family who had a baby and was looking for more space on a budget of about $ 4 million. rice field.
“They decided to stop their search altogether,” Ryan said. “They still need space, but interest rates and economic instability are holding people back.”
As in April, buyers are not attending open houses or shows. She said she had a list that attracted 31 people to the open house that month. When she held an open house in June at a similar list and similar price, she only appeared four.
In addition to financial buyers worried about financial markets, workers and executives in Manhattan technology and venture capital are also withdrawing real estate for fear of layoffs and cost savings.
“My clients in the tech industry are just ready for whatever happens,” Ryan said. “Some people have seen a sharp loss of wealth since the beginning of the year.” Ryan cannot use comparable prices from the beginning of the year when sellers are currently setting prices on the list. Said. She said some people have reduced prices by up to 10% from their early 2022 equivalents, all depending on the apartment.
“Currently, there isn’t enough data on the market,” she said. “It’s just moving and changing very fast.”