Manhattan home prices are still close to record highs, but there are more signs that the market is starting to cool as sales drop by close to a fifth over the past year.
The average sales price of a condo or co-op jumped 17% in the third quarter compared with a year earlier to $2.03 million, the second highest figure on record, according to a report by appraisal firm Miller Samuel and Douglas Elliman Real Estate released Tuesday. At the same time, the average price in the luxury market, defined as the top 10% of sales, surged by close to a third to a record $8.8 million.
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However, the quarterly report's figures are skewed by sales that had been in contract in the last 12 to 18 months in some of the city’s most expensive new developments such at 432 Park Ave., the tallest residential building in the western hemisphere, but only closed in the third quarter.
Indeed, a raft of other figures in the report indicate a market that is starting to slow down, especially at the top end. Just over 17% of homes, for example, were sold above asking price between July and September, a sign that a bidding war took place, down from a record 31% a year earlier. This year’s figure, though, is still above average.
The slide in the proportion of bidding wars has been driven by a drop in demand for expensive homes combined with a jump in inventory. Across the market as a whole, there were 2,974 sales between July and September, 18.6% lower than a year earlier, while inventory rose 10.8% to 6,263. The number of days a property spent on the market, meanwhile, was 8.2% higher, at 79.
"This backlog of contracts signed around one or two years ago will end in the middle of 2017 and we will see average prices come down a bit," Jonathan Miller, the chief executive of Miller Samuel, told Mansion Global. "Whether it's resale or new development, the trend is that it’s soft at top and stronger when you move lower."
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This chimed with a separate report also released Tuesday by Compass, a brokerage, which found that demand for homes priced under $3 million, those most likely to be used as primary residences, continues virtually unabated, while the continued increase in new development inventory, especially at the highest end of the market, has further reduced urgency for luxury buyers.
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