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Sales contracts for Manhattan apartments fell by nearly a third in June as the city’s scorching real estate market began to cool amid recession fears and plunging stocks.
New York real estate was on a tear during the early spring, with high prices and strong sales. According to data from the Miller Samuel and Douglas Elliman firms, the average selling price for the second quarter increased to $1.25 million. The number of sales – more than 3,800 – was the highest for the second quarter since the housing boom of 2007.
Yet most of those deals were negotiated in the early part of the year. Brokers and real estate analysts say the Manhattan market fell sharply in June, as stocks and crypto declined, interest rates rose and economists began discussing the possibility of a recession.
Sales contracts for co-ops and condos in Manhattan fell 30% in the quarter compared to June 2021, according to Miller Samuel and Douglas Elliman.
“During the second quarter, that slowdown accelerated: fewer signed contracts, fewer bidding wars, more price cuts and a gradual increase in available inventory,” Coldwell Banker President Frederick Warburg Peters wrote in a market report. “A gradually slowing sales market is manifested throughout the city in all boroughs and at all price points.”
Manhattan’s decline is particularly abrupt given that the market has tilted toward high-end, wealthy buyers who are less dependent on mortgages and rising rates. In the second quarter, 53% of all apartment purchases in Manhattan were cash. It’s even higher at the high end — 99.6% of purchases above $4 million were cash, according to Miller Samuel CEO Jonathan Miller.
Brokers say wealthy buyers in Manhattan are more afraid of the loss of crypto than the stock market crash and higher mortgage rates. Also there are constant concerns about New York’s crime and high taxes.
“It’s a market in transition,” said Bess Friedman, CEO of Brown Harris Stevens. “Buyers are in the driver’s seat right now. There’s a lot of uncertainty and weak confidence right now.”
Prices haven’t started falling yet – at least not broadly. But brokers say buyer presence in open houses and multiple bids has all but evaporated. Mackenzie Ryan, a top New York broker with Douglas Elliman, said one of her clients was a Manhattan family who had one child and were looking for more space with a budget of about $4 million.
“They just decided to stop their search altogether,” Ryan said. “They still need space, but interest rates and economic fears are prompting people to pause.”
Buyers are not showing up for open houses or demonstrations as they were in April. She said she had a list that month that drew 31 people to the open house. When it held an open house in June for the same listing and similar price point, only four people showed up.
With buyers in finance worried about financial markets, workers and executives in tech and venture capital in Manhattan are also pulling back on real estate for fear of layoffs and cost-cutting.
“My clients in tech are ready for whatever happens right now,” Ryan said. “Some people have seen a huge loss in wealth since the beginning of the year.” Ryan said that when sellers are pricing their listings now, they can’t use comparable prices compared to earlier in the year. She said some are reducing them by as much as 10% compared to 2022, but it all depends on the apartment.
“There just isn’t enough data on the market right now,” she said. “It’s just moving and changing so fast.”