Residential market report: Buyers gain strength

Leverage shifts in upper price range as Manhattan inventory ticks up

From left: Jeannie Woodbrey, John Gomes and Julia Hoagland
From left: Jeannie Woodbrey, John Gomes and Julia Hoagland

For the better part of two years, sellers have dominated Manhattan’s residential market, while buyers clamored over limited and in some cases, nonexistent, inventory.

But veteran brokers say the leverage is shifting, ever so slightly, toward buyers in the luxury segment, partially as a result of a rising number of new units hitting the market. “For a long time, the seller was in control,” said Douglas Elliman’s John Gomes. “We’re seeing more opportunities for buyers. It’s almost an even market. The buyer is inching up in the control.”

To be sure, competition lives on at many price points, particularly for the hottest segments of the market, like two-bedrooms asking $2 million or less.

But in the $5 million and up segment, buyers are “taking their time,” according to Compass’ Julia Hoagland. “Properties in this market sector still sell expeditiously if well-positioned,” she said. “However, multiple bid situations are less frequent and buyers in this market have the benefit of being thoughtful about their purchases.”

Leonard Steinberg

Leonard Steinberg

The same is true at the upper end of the luxury market, according to Compass President Leonard Steinberg. For example, Steinberg recently sold Bon Jovi’s penthouse at 158 Mercer Street for $37.5 million, down from the original asking price of $42 million. “With the volume of dollars at stake, people are more prudent about doing their homework. For the first time, I can see [the market’s] balance,” he said. “I’ve seen price reductions adjusted to reality. It’s people catching their breath.”

Several brokers said savvy buyers simply won’t tolerate overpriced apartments under any circumstances. “They would rather wait until next year than give an unrealistic seller too big of a price,” said Brown Harris Stevens’ Greg Roache, who partners with Roger Gillen.

Warburg’s Lisa Larson said several classic sevens on the Upper East Side sat on the market this spring. “You could show a buyer five or six apartments, which was a lot compared to the year before,” she said. Larson is representing one buyer who looked at an eight-room co-op on Fifth Avenue that’s seen several price drops, and is now listed at $5.995 million. “If it’s not priced properly in the beginning, it will not sell,” she said. “It’s not 2007.”

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Overall, Manhattan’s median sales price of $980,000 rose 7.7 percent during the second quarter, even as the number of sales dropped 20 percent to 2,674, according to real estate appraisal firm Miller Samuel. Listing inventory during the three-month period was 5,730, up 1.3 percent, while the absorption rate rose 25.5 percent to 6.4 months.

Not surprisingly, one of the main factors shifting the balance in buyers’ favor is the influx of new condo inventory in Manhattan. There are roughly 6,500 new condos coming to market this year, up from 2,500 last year, according to Corcoran Sunshine Marketing Group.

45 East 22nd Street

45 East 22nd Street

“Buyers have more choice in new development than they’ve had in years,” said Corcoran Sunshine’s Jeannie Woodbrey, who is the senior sales director at 45 East 22nd Street, an 83-unit tower being developed by Continuum Co. “With [many of the] anticipated towers across the city finally coming to market, those who have been waiting on the sidelines are finally ready to make a choice.”

She added that new development is gaining market share. Condominiums now represent about half of all available inventory, the highest share since 2010, she said. That “growth trend will continue for the next couple of years, based on properties in the pipeline.”

Town’s Ryan Fitzpatrick, who is managing director of the firm’s Flatiron office, said there is a perception among buyers that there is a lot more inventory, even though in reality, there are only a few thousand more new units. “This is doubtless contributing to the slower pace of sales at the high end,” he said. And, he added, “Overall there is more of a balance between supply and demand.”

However, Warburg’s Larson said the market continues to favor sellers of properties $2 million and under, where inventory is limited and competition is as fierce as ever. “Inventory is low, the number of days it takes a listing to go into contract tumbled throughout the spring selling season, demand remained high and open houses still saw the need for a red velvet rope to control traffic,” she said.

But, she said, during the summer months, there are fewer buyers hunting for apartments. “There’s always an opportunity for buyers in the summer,” she said, “because not as many people are looking.”