In the annals of residential real estate, the dog days of summer are never a good time to sell an apartment. So it’s not surprising that fewer than 1,000 Manhattan units were listed in the week before Labor Day. But in reality, more than 3,000 were actually for sale, representing a cohort of apartments known as “shadow listings” that were removed from the market during the slow spell of late summer.
According to analytics site UrbanDigs.com, there were 3,534 shadow Manhattan listings in mid-August — up 67.5 percent year-over-year. That indicates that sellers may finally be adjusting to a market where buyers hold the cards, said John Walkup, the chief operating officer at UrbanDigs.
Although sitting on the sidelines in the waning days of summer is often the norm, Warburg Realty’s [TRDataCustom] Wendy Arriz said this year, several of her clients are also concerned about volatility in the financial market and believe prices are still declining because of oversupply on the high end.
In fact, as temperatures begin to drop, there are signs that softness on the high end of the market could soon trickle down to the tiers below. According to UrbanDigs, the price per foot for properties $10 million-plus dipped to $2,368 per square foot — slightly below the $2,475 per foot price among $5 million apartments. Walkup said that “crossover” foreshadowed a softening in the market under $10 million.
Douglas Wagner, director of brokerage services at Bond New York, said mid-market buyers in this $5- to $10-million price range are increasingly making “aggressively low” offers, “as though there were the same inventory blight that the new development condo market is seeing.”
He said that open house attendance is still strong despite a “surprising ‘wait-and-see’ approach to making actual offers and signing actual contracts.”
While Wagner said he does not believe the market is softening, he conceded that buyers are testing their luck with the hope that prices will drop. “Some buyers will drop multiple bids around various properties, just to determine where they can get… a deeper-than-normal discount,” he said.
Meanwhile, sales under the $5 million mark are booming.
“Properties priced at $5 million and below are being scooped up at a record-breaking pace,” said Douglas Elliman’s Roger Erickson, who noted that he recently sold a $2.9 million penthouse after just a week on the market. “The last time it was on the market, it took many months to sell,” he said.
Erickson is also representing a buyer who recently closed on a Chelsea apartment for $3.6 million; it was originally listed for $5.4 million. And he has a client who’s looking to buy a Soho property currently listed in the mid-$5 million range, but the unit appears headed for a discount. “The broker is emailing, ‘Is your guy still interested?’” Erickson said of that deal. “As time goes on, [my client might] be able to get it for less than he would have.”
To be sure, high-end sales haven’t stopped altogether.
Brown Harris Stevens’ Lisa Lippman said she did three deals between $20 and $25 million over the past four months — but those sales involved buyers who knew exactly what they wanted and “needed something specific.” And she predicted that prices in the sub-$20 million market could still drop another 10 to 20 percent.
But brokers are seeing the exact opposite in the entry-level market. William Raveis NYC agent Terry Bater said properties listed for less than $2 million frequently go for 5 to 10 percent above the asking price.
Overall, the median sale price in Manhattan was $1.1 million during the second quarter, up about 13 percent year-over-year from $980,000, according to real estate appraisal firm Miller Samuel.
Karla Saladino, managing partner of Mirador Real Estate, said that jump was a byproduct of an oversupply of new development units across most price points — with the exception of the entry level.
“You can’t dump thousands of units onto a marketplace in a three-year period and not expect the market to correct or flatten out because of it,” she said.
Saladino also noted that some buyers who can afford apartments in the $5- to $10-million range simply don’t want to be saddled with such a large asset. As a result, they trade a tax deduction for flexibility and rent an apartment for $10,000 to $15,000 a month instead. “Young entrepreneurs value freedom of everything. So purchasing a home and leveraging yourself doesn’t appeal to them,” she said.