Cash is King in Manhattan Apartment Deals

With the cost of debt continuing to rise, cash is king in Manhattan’s apartment market as the number of transactions involving mortgages dropped to about a third of the total, an all-rime low.

The average median sales price continues to hover near record levels, notching $1.2M in the second quarter, slightly lower than the $1.25M median in Q4 2022 and a bump up from the Q1 level of $1.075M, according to a new report from Elliman.

“The Manhattan co-op and condo market is nearing the end of price distortions experienced with comparisons to the pandemic-era sales boom,” the report said.

Although the number of sales that closed in the second quarter ticked up in Manhattan to 2,325 from the first quarter total of 2,242, the report, which highlights year-over-year trends, noted that this represents a drop of nearly 40% from the Q2 2022 level of 3,834.

Listing inventory posted a 10.3% increase to 7,719 in Q2, up from 6,996 in the first quarter, representing 10 months of supply, up 6.4% over the fourth quarter level and an improvement of more than 60% compared to the six months of supply during last year’s robust market.

Months of supply is defined as the number of months it will take to sell all listing inventory at the current sales rate.

“Comparisons to the prior year’s market reflect the slowdown in sales due to the spike in mortgage rates, a by-product of the Federal Reserve’s effort to quell the red-hot economy, and a limited amount of listing inventory as many would-be sellers remain wedded to their low mortgage rates enjoyed over the past five years,” Elliman’s report said.

The second quarter tally of 2,325 in sales is more than 21% below the pre-pandemic level in Manhattan.

Median sales prices for luxury apartments expanded on a year-over-year basis for the fifth time in six quarters, with the median sales price surging to $6.7M in the second quarter, an 18.7% jump over the first quarter median of $5.7M.

The market share of bidding wars of luxury apartments was the third-highest on record—the market share for bidding rose to 7.5%–as the listing inventory declined year-over-year for the first time in four quarters.

The Q2 2023 inventory stood at 1,301, a 12% drop from the first quarter total of 1,493 luxury listings.

The listing inventory of new development declined YOY for the second consecutive quarter, while a year-over-year comparison of average sales size fell sharply for the third consecutive quarter, Elliman reported.