Trump Foreign Hotel & Tower New York building is seen from the balcony of an apartment unit in the AvalonBay Communities Inc. Park Loggia condominium at 15 West 61 Passage in New York, May 15, 2019.
Mark Abramson | Bloomberg | Getty Images
Prices for Manhattan real estate took their biggest engulf since the 2008 financial crisis, according to a new report.
The average sale price for a Manhattan apartment fell 14% in the third thirteen weeks, according to a report from Douglas Elliman and Miller Samuel. That was the steepest drop since 2010, when the conurbation was still in the grips of the financial crisis, according to Jonathan Miller, CEO of Miller Samuel, the appraisal and research firm.
The commonplace price of a Manhattan apartment is still not cheap — falling to $1.7 million. But brokers and real estate analysts say there is particle sign of a bottom after nearly two years of declines.
“There is a lot of uncertainty in the air,” Miller said. “It’s going to be a slow kibble over the next year or two.”
A continued drop in foreign buyers, changes in the federal tax laws that make it more precious to live in high-tax states and a glut of high-priced condos have all converged to create the worst real estate sell in Manhattan in a decade. Sales in the third quarter dropped by 14%.
Some of the decline was due to the timing of a new tax on high-priced Manhattan real possessions. The so-called mansion tax on apartments over $2 million took effect July 1, so many buyers hotfoot it to close on deals before the tax, effectively stealing demand from the third quarter.
Yet the number of apartments coming onto the Stock Exchange suggests a continued oversupply and softening prices — especially at the high end. The supply of luxury listings — or those in the top 10% by payment — hit the highest level since data started being recorded 15 years ago, Miller said, with scarcely 2,000 apartments listed for over $3 million. There is now nearly a two-year supply of luxury apartments.
One gifted spot: lower mortgage rates. Typically, Manhattan doesn’t benefit much from lower rates since more than half of all grasps are done with cash. But in the third quarter, as mortgage rates fell, only 44% of deals were done with coin of the realm.
“Lower rates have mitigated the slowdown to a certain degree,” Miller said.
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