Over the past few years the real estate market in Manhattan has seen significant growth. However now an article in Forbes.com highlights the fact that some of the priciest boroughs in New York are continuing to show signs of softening.
The article focuses on a report from real estate brokerage Compass that shows the total number of sales fell by 25% during the third quarter of this year compared to the same quarter last year. Even though sales numbers may be falling, prices are continuing to rise. During the third quarter the median price of a condominium was $2.3 million, an increase of 10% year on year. The median price for a co-op apartment reached a new high at $820,000.
Experts feel this softening is healthy for the market, providing an important pause from the unsustainable price growth seen over the past two years. They point out that this pause will allow inventory to be gradually absorbed at the upper end of the price range. At the moment the average price of a home in Manhattan is around $2 million. In spite of this, the higher end of the market is in the process of softening due to an increase in the number of expensive condominiums coming onto the market combined with a decrease in demand for high-end properties.
The article also points out that the third quarter inventory showed the largest annual increase in more than seven years at 21%. However overall inventory levels were lower at 5860 units for this period compared to the first quarter of 2009 at 12,336. The market has remained lethargic since last year as number of apartments in Manhattan sold for prices in excess of $10 million in 2015 fell by 12% compared to a year earlier. Much of this decline came during the second half of 2015. The amount of luxury housing available for purchase in Manhattan doesn’t seem to correlate with the demands of the market, according to the Compass survey. It shows that homes priced in excess of $3 million account for more than a quarter of inventory levels, but for less than 14% of contracts signed.
Even though the top end of the market may be softening, overall the real estate market in Manhattan is still relatively strong. Home values are continuing to increase and inventory levels are still tight. Construction of luxury apartments is increasing, but there are far fewer listings for more affordable and moderately priced homes.