Manhattan sales in decline after mansion tax frenzy
After sales soared last quarter, Manhattan’s residential market is tumbling back to reality — though low mortgage rates are softening the landing.
The number of closed sales fell by nearly 15 percent year-over-year in the third quarter, and the average sales price dropped to $1.65 million, down from more than $2 million last quarter and $1.9 million in 2018, according to Douglas Elliman’s quarterly report, authored by Miller Samuel’s Jonathan Miller.
The swift decline, compared to the second quarter’s 12.5 percent year-over-year increase, comes on the heels of a flurry of closings right before the mansion tax went into effect in July, Miller noted.
Meanwhile, Manhattan apartment resale prices saw the biggest decline in more than eight years thanks to heavy discount demands from buyers, as Bloomberg first reported. Previously occupied condos and co-ops resold for a median of $915,000, 8 percent less than a year earlier, according to Elliman’s report.
But there’s also an unusual bright spot for both buyers and sellers: all-time low mortgage rates. As a result, buyers took out more mortgages than in the past five years, while the number of all-cash buyers fell steeply.
Since Miller began tracking the share of cash sales compared to mortgage purchases in 2014, an average of 80 percent of sales over $5 million were cash. That fell to 44.2 percent in the third quarter, while the rise of financing occurred at “all price strata,” he said.
Halstead’s Diane Ramirez called financing the “smart thing to do” and said it just adds to buyers’ arsenal. “It’s almost free money,” she said. “The purchasing power that buyers have today is something I haven’t seen in years.”
And Elliman’s CEO and president, Steven James, called the rise in leveraged buyers “a good sign” for the market. “The thing to remember is two-thirds of the consumers rent and only one third own,” he said, noting that when rates go down, “you have a huge pool of potential buyers.”
Miller pointed to falling prices as a sign of hope that sellers are adjusting to market realities. And despite weakness at the high end, he doesn’t see oversupply as a problem.
“Inventory overall is high, but it’s not at record levels,” Miller noted. He compared the third quarter’s average inventory of 7,353 units on the market to the quarterly average of 10,445 units following the 2008 crash.
Miller added that, aside from price, the bigger issues holding back buyers are political: notably, changes to federal, state and city property taxes, the ongoing trade war with China and the state rent law overhaul. “Uncertainty is the operative word that is behind the real estate market right now,” he said. — Erin Hudson
Foreclosures in Manhattan and Staten Island see big jumps
Manhattan and Staten Island foreclosures saw 118 percent and 183 percent year-over-year increases in the third quarter, respectively, a recent report from PropertyShark found.
While the percentage increase in Manhattan was very sharp, the increase by raw numbers was more modest. The borough saw 48 property foreclosures in that period, up from 22 in 2018’s third quarter and the highest number the borough has seen since the fourth quarter of 2016, when there were 54 cases.
Staten Island saw 136 foreclosures in the third quarter, up from 48 foreclosures in the same period last year, though still the lowest number of quarterly foreclosures the borough has seen since 2018’s fourth quarter, when there were 177 cases. Staten Island also saw a significant uptick in pre-foreclosure filings, according to PropertyShark’s analysis.
But across the five boroughs on the whole, foreclosures increased by just 1 percent year-over-year, to 723 in the third quarter — the lowest number of quarterly foreclosures so far this year.
The Bronx, Queens and Brooklyn all saw foreclosures drop by 51 percent, 10 percent and 2 percent, respectively, according to the report. — Eddie Small