The Manhattan residential real estate market is slowing as high borrowing costs, stock, bond, and crypto turmoil, recession fears, and inflation woes have led to the first quarterly price decline since the early days of the virus pandemic. This a welcoming sign for prospective homebuyers who might catch a break this year as prices are expected to slide, but the question remains how much, mainly because of tight inventory.
A new report by appraiser Miller Samuel Inc. and brokerage Douglas Elliman revealed the median price for co-ops and condos was around $1.1 million in the fourth quarter, a 5.5% decline versus the same period in 2021, according to Bloomberg.
The quarterly drop was the first since the second quarter of 2020, when the virus pandemic shuttered the economy and resulted in a mass exodus of people from the metro area and turmoil in the real estate market.
Jonathan Miller, president of Miller Samuel, expects "a modest decline" in residential real estate in Manhattan this year, "but not a correction."
Miller pointed to the tight inventory as a key "underpinning" of what's preventing property values from crashing amid soaring borrowing costs and an affordability crisis that has crushed demand.
During the quarter, 6,523 homes were listed on the market, up 5.1% from the year but down 16% from the previous three months. The borough has a tight inventory problem.
Miller Samuel and Douglas Elliman's data showed the share of Manhattan buyers paying all cash was 55%, the highest since they began tracking the type of payments in 2014. The increase in cash buyers comes as the 30-year fixed mortgage rate soared above 7% for the quarter.
High borrowing costs dramatically slowed down deals. Closed purchases totaled 2,546, down 30% from the third quarter and a year ago.
"The quarter, though, doesn't appear to be the start of a steep tumble," Bloomberg said. However, tight supply is the last pillar holding up the Manhattan residential real estate market.