The number of homebuyers purchasing apartments in Manhattan has dropped significantly by 46 per cent, with many instead flocking to the New York suburbs and to Florida.
According to data from Compass, some 10,000 homes are currently up for sale in Manhattan, a new record.
Even before the pandemic, there was a glut of high-end apartments needing to be sold in the city. But the inventory of unsold apartments does continue to rise as new listings continue to hit the market, CNBC reports.
Current luxury apartments on the market would take nearly three years to sell, according to a report from Miller Samuel and Douglas Elliman.
‘There is no shortage of apartments for sale, but there is a shortage of buyers,’ said Jonathan Miller, CEO of Miller Samuel.
In the third quarter, only 1,375 total sales transpired. The number of sales is 44 per cent down from just a year prior. Signed contracts for September also fell 42 per cent in Manhattan from last year, according to Miller Samuel.
Manhattan has been hit with high unemployment, growing sanitation and public transit problems, increases in crime and has only had 10 per cent of office workers return to their office building. As a result, buyers are hesitant to purchase homes.
As the city looks to possibly raise taxes in a bid to save budget holes impacting NYC and the state, more buyers are looking to spend their real estate dollars elsewhere.
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Contracts signed in the Hamptons have gone up 76 per cent in September, compared to last year. In Westchester County, New York, purchases have increased by 56 per cent while they have risen some 36 per cent in Fairfield County, Connecticut.
Florida has also seen an increase surge in buying, with signed contracts going up 62 per cent in Palm Beach County and 21 per cent in Miami-Dade County.
In addition to urban flight, Manhattan brokers have mislead the public by touting a ‘buyer’s market’ in Manhattan for months. They’ve claimed that prices were going to drop and continue to do so, in a bid to entice those who have been looking to buy for a while.
The average sale price in Manhattan rose 32 per cent in the third quarter to $2.18million. The median sale price also increased by seven per cent to $1.1million.
Statistical flukes are responsible for the increase, according to analyst. 2019’s city mansion tax depressed third quarter sales at the time. Hyper-priced deal closings at the new luxury condo tower at 220 Central Park South also contributed to the prices.
Analyst say a more accurate reflection of price drop comes from the average discount between the asking price and sale price. Apartments in the third quarter sold an average discount of nine per cent, compared to five per cent before the pandemic.
Average price-per-square foot in Manhattan did rise in the third quarter. This suggest that prices may drop further before buyers should rush in.
‘If you look at 2009 and then Sept. 11, the sellers can take a few years to adjust,’ Miller said.
Miller added that he doesn’t expect prices to fall more than about 10 per cent. Prior to the pandemic, prices had already gone down 15 per cent from the peak of 2015-2016. Buyers will hopefully be incentivized to purchase by the time the price is down from 25 per cent from that point.
‘But that all depends on quality-of-life issues like policing, sanitation and public transportation,’ he said. ‘I don’t see an improvement in the market in the fourth quarter. But I think we could see notable improvement in 2021.’