Manhattan’s apartment market nears end of pandemic warp

High mortgage rates crowned cash king and cooled prices last quarter in Manhattan’s residential market. 

Elevated borrowing costs fueled cash purchases in the borough and reduced financed purchases to a record low, according to a quarterly report by Miller Samuel for Douglas Elliman. Almost two thirds of all closings in the second quarter were cash deals. 

Cash purchases fell 29 percent on an annual basis, but rose 22 percent from the previous quarter. Higher rates have taken a sizable bite out of financed purchases in the last year, which dropped 52 percent annually and 18 percent since the first quarter. 

Elsewhere in the market, the second quarter saw balance return as the pandemic-era sales surge drifts further into the rear view. 

The median sales price across the borough’s condos and co-ops fell for the third straight quarter, but remains the third highest on record. Last year’s second quarter median sales price was the highest in Manhattan’s history.

The borough’s apartment market is beginning to emerge from the “Fed rate-fueled frenzy” of 2022, according to report author Jonathan Miller. 

“Over the next quarter or so, the year-over-year comparisons won’t be so skewed against that,” Miller said.

The median sales price last quarter was $1.2 million, down 4 percent from $1.25 million a year earlier.

Though price comparisons are starting to even out, the number of sales last quarter remains considerably lower than that of the second quarter last year. The number of sales fell to 2,325, down from 3,834.

“On a sales basis, we’re still comparing to the year-ago rocket shop,” Miller said. 

The number of homes on the market is still “chronically low,” Miller said. Listing inventory dropped 3 percent year-over-year to just under 7,000 active units, but rose 10 percent from the first quarter.

Sellers remain reluctant to put their homes on the market because they don’t want to give up low mortgage rates secured during the pandemic. 

“Everyone is playing a waiting game,” Miller said, adding that low inventory levels are keeping prices high in the borough.

In the luxury market, which the report defines as the top 10 percent of sales, the number of sales dropped 40 percent annually, from 386 to 233. The median sales price rose 4 percent year-over-year to $6.7 million, up from $6.5 million.

Listing inventory in the luxury market declined by 8 percent, from 1,420 in the second quarter last year to 1,301. With few listings, nearly 8 percent of luxury closings resulted in a bidding war, the third highest market share on record.

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