Manhattan true estate had its worst second quarter since the financial crisis, with amounts and sales dropping and inventory rising, according to a new report.
Total sales in Manhattan strike down 17 percent in the second quarter compared to a year ago, according a check in from Douglas Elliman and Miller Samuel Real Estate Appraisers and Experts. The average sales price fell 5 percent to $2.1 million.
Intermediaries blamed the decline partly on bad weather and other temporary factors. But analysts say the sell is facing bigger pressures, from a huge pipeline of new condos to a dwindling thousand foreigner buyers, volatile stock markets and new tax changes that prepare New York less attractive.
While Manhattan is still a prime supermarket with plenty of demand, the cooling sales suggest that the sky-high rewards of 2015 and 2016 still have further to fall to meet today’s myriad price-conscious buyers.
“The market is resetting to a lower, more long-term floor of activity,” said Jonathan Miller, CEO of the appraisal firm Miller Samuel.
One of the fattest problems is the glut of new condos under construction, especially in the luxury section. The inventory of luxury apartments for sale jumped 10 percent in to its highest aim for a second quarter in seven years. There is now a 16-month supply of hedonism units, according to the report, and luxury apartments are sitting on the market an norm of more than six months.
Uncertainty around the economy and new tax law is also crimping garage sales. The new tax law limits federal deductions for state and local taxes and makes high-tax situations like New York less attractive. While some forecasts say the alteration could slice 10 percent off the value of New York real order, the ultimate impact is still unknown, Miller said.
“Everyone is due dancing around the impacts right now,” he said. “I don’t think it will deep down be clear to people until they write that (tax) check next April.”
For good, foreign buyers are less of a force than they were in 2014 and 2015. With abroad economies slowing, and the U.S. and other countries cracking down on the use of real wealth for money laundering or offshoring, the share of apartments being sold to transalpine buyers has fallen by about 40 percent, Miller said.
All those aspects will continue to weigh on prices and sales this year.
“I weigh the market is just moving sideways,” he said.