- Real estate in Manhattan has been moving toward a buyers’ market.
- The median sales price of units sold in Manhattan fell 6% in the final three months of 2018.
- The fourth quarter marked the first time in three years that the figure was below $1 million.
In the latest sign that Manhattan is heading toward a softer real-estate market, the typical cost of housing sold fell below $1 million during the final stretch of 2018 for the first time in three years.
The median sales price of units sold in the borough fell nearly 6% from the same period last year to $999,000 from October to December, according to a report from listing broker Douglas Elliman Real Estate, the lowest since 2015. Though the rate of decline is steadying, the number of total sales fell for a fifth straight quarter.
With bidding wars occurring at the lowest rate within the market in six years, according to the report, Douglas Elliman’s New York City office president Steven James said market dynamics had offered “an excellent opportunity for buyers.”
Co-ops performed better than condos, the report out Thursday said. Most inventory gains were seen in the studio and one-bedroom market, while home prices skewed the overall average higher through larger-sized sales.
“All-in-all, this was a weaker market than a year ago, but there was nothing dramatic to change from prior quarters in 2018,” added report author Jonathan Miller of Miller Samuel Inc. “It looks like 2019 market sales and prices might show us ‘more of the same’ as the federal tax law and higher rates play a crucial role in the housing marketplace.”
Real-estate activity in Manhattan has contrasted with trends across the country, where housing shortages are expected to persist in the months ahead. Compounded by falling residential-construction activity and rising interest rates, that could price some Americans out of the market.
The new tax law could be one possible reason for the disconnect. Lower mortgage-interest deductions and new caps on state and local tax deductions have reduced incentives for Americans to own homes. This means the next buyer might adjust how much they are willing to pay, according to Mark Fleming, chief economist at First American.
“This is particularly relevant in New York,” Fleming said. “It’s now more expensive than before to own a higher-priced home.”
Meanwhile, the rate at which national home costs are rising appears to be slowing. A CoreLogic report out Wednesday showed annual price gains slowed to 5.1% in November from 6.2% a year earlier.