Manhattan home sales plunge as sellers refuse to get 'realistic' about what buyers can afford
- Home sales in Manhattan have slowed for four straight quarters, according to Douglas Elliman Real Estate.
- Sales are softening largely because many home sellers have high expectations relative to what buyers can afford.
- "My prediction is that sales snap back when sellers get more realistic about pricing," said Jonathan Miller, CEO of the real-estate appraiser Miller Samuel and author of the report..
- As housing inventory piles up, buyers who are patient and aggressive negotiators during their hunt might just find a homeowner who will budge.
Until recently, it was mostly buyers in Manhattan's luxury housing market who were spoiled for choice.
The aggressive price cuts and vacancies in the priciest apartments that cost over $1 million have been well documented, including at 432 Park Avenue, the slim, squarish tower that's the world's tallest residential building.
But even the cheapest homes are now struggling to sell, according to a report released Tuesday by Douglas Elliman Real Estate. It showed the number of sales fell for a fourth-straight quarter, by 11%, during the July-September period on a year-over-year basis.
The lower end of the market is starting to soften, too, and this represents a reset taking place, according to Jonathan Miller, CEO of the real-estate appraiser Miller Samuel and author of the report.
"'Soft at the top is still there," Miller told Business Insider. "It's just that we are starting to see softness at the starter end of the market, and that's relatively new."
The availability of housing by apartment size helps to tell the story of buyers' reluctance (or inability) to settle for prevailing prices. Inventories rose by about 21% year-on-year for one-bedroom apartments. But that rate slowed to 8% for two-bedrooms, and 5% for four-beds, Miller said.
This trend, Miller said, ran counter to the last couple of years when more buyers pounced on smaller and cheaper apartments.
Part of the softness is due to home sellers not budging during price negotiations. According to Miller, they're still attached to a market that existed before the new tax law came into effect.
Its impact will be more understood during tax season next April, Miller said. Meanwhile, many homeowners don't want to sell feeling like they left money on the table. Also, rising interest rates don't give them much incentive to move because chances are they locked in at a lower rate.
"My prediction is that sales snap back when sellers get more realistic about pricing," Miller said.
New York is just one of several large US cities where buyers are getting more deal-savvy because prices have soared. Nationally, home prices have climbed above their pre-crisis level and at a faster rate than wages. That's hurting would-be buyers; monthly existing-home sales have failed to cross the 5.72 million level reached in November 2017.
"Existing home sales have peaked," US economists at Bank of America Merrill Lynch said in a note last week, adding that affordability largely explained the slowdown.
What this means is that buyers who are more patient in their hunt might just find a homeowner who will budge. According to StreetEasy, the number of home sellers who cut their asking prices reached its highest level since 2009 during the week after Labor Day.
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