Manhattan homebuyers get more choice as resale supply jumps

Rising inventories level the playing field for buyers and sellers after years of bidding wars fueled by historically low supply

PUBLISHED : Monday, 04 July, 2016, 5:14pm
UPDATED : Tuesday, 05 July, 2016, 7:52pm

Residents who aren’t necessarily millionaires are having an easier time finding an apartment to buy in Manhattan.

After years of scavenging a market dominated by new developments for ultra-wealthy investors, those who lack unlimited funds are finding more options than they’ve had since 2012.

There were 5,362 previously owned condominiums and co-ops on the market at the end of June, a 25 per cent jump from a year earlier, according to a report Friday by appraiser Miller Samuel Inc and brokerage Douglas Elliman Real Estate.

Rising inventory is helping to level the playing field for buyers and sellers after years of bidding wars fueled by historically low supply, especially for homes of less than $1 million.

Owners of such properties had long held off listing their units, realising trading up would be difficult in a market with ever-rising prices. In the second quarter, the replenished resale supply approached the 10-year average for the period as sales cooled, said Jonathan Miller, president of Miller Samuel.

“We’ve had a long run in terms of activity,” Miller said in an interview.

“The last four, five years have been about heavy volume of sales and price growth, and part of this might be sellers finally looking to cash out.”

The increased inventory “takes the edge off many sellers’ plans,” he said. “It’s no longer an exclusive sellers’ market.”

The last four, five years have been about heavy volume of sales and price growth, and part of this might be sellers finally looking to cash out
Jonathan Miller, president of Miller Samuel

Resale transactions totaled 2,231 in the second quarter, down 9.4 per cent from a year earlier, according to the report.

The median price of those deals was $945,000, unchanged from the second quarter of 2015.

Of all the previously owned apartments on the market at the end of June, 83 per cent would be considered “non-luxury,” defined for Q2 as anything priced below $4.33 million, Miller said.

There were still bidding wars in the quarter, but fewer buyers were willing to stretch. Forty-one per cent of all sales were at or above the seller’s asking price, compared with 51 per cent a year earlier, he said.

Resale apartments sold during the quarter spent an average of 88 days on the market, up from 83 a year earlier as some sellers clung to lofty price goals, according to brokerage Brown Harris Stevens, which released a separate report on the Manhattan market with sister firm Halstead Property.

“Now is not a time to be aspirational in your pricing,” said Bess Freedman, executive vice president of sales at Brown Harris Stevens. “That is what I would tell sellers everywhere.”

Matthew Cipriano and Rachel Godfrey, both 37, knew they had some leverage when they spotted a two-bedroom co-op on East 36th Street that had gotten a price cut to $1.2 million from $1.23 million just two days after it was listed in February.

They went to two open houses for the property, then brought their mothers and two-year-old son, then made an initial offer at 20 per cent below the asking price, Cipriano said.

“It was something we felt very comfortable doing,” said Godfrey, who with her husband last year sold an apartment two blocks away.

“I had a sense of what this neighbourhood was doing and how things were stalling, and we figured if we were so off they would have told us so.”

They reached an agreement to buy the apartment for $1.08 million. As they awaited the contract in the mail, they were notified by their broker, Tracie Hamersley of Douglas Elliman, that the seller had gotten a better, all-cash bid, but that deal fizzled less than a day later.

When the seller returned to Cipriano and Godfrey’s offer, the couple said yes — on the condition that they could also have the dining-room chandelier. The sale closed last month.

“You know the old real estate saying ‘time kills all deals?’ That has been true 100 per cent of the time — until this year,” said Hamersley.

“I’ve had three different deals in May where there was a lesser sense of urgency, where buyers took their time.”

A measure of future sales activity also indicates a cooling market.

Contracts to buy condos and co-ops declined 12 per cent from a year earlier to 3,016, according to a separate report Friday by Compass. The brokerage also reported a 20 per cent surge in condo listings priced from $1 million to $3 million, with 2,402 such properties available at the end of the quarter.

Corcoran Group in its own report on Friday said second-quarter sales of previously owned co-ops dropped 29 per cent from a year earlier. The median price of resale co-ops increased for all sizes except for two-bedroom units, which fell 4 per cent to $1.25 million.

On the Upper East Side, the number of apartments that changed hands in the quarter dropped 10 per cent to 760, Corcoran Group said.

The median price of those deals climbed 5 per cent to $1.15 million. Transactions on the Upper West Side fell 34 per cent to 538, and the median price was unchanged at $1.17 million.

Downtown — below 34th Street excluding the Financial District and Battery Park City — was the only area that had an increase in year-over-year sales, according to Cororcan Group.

Closings in new developments such as Greenwich Lane and 150 Charles St helped push the median price up 34 per cent to $1.6 million.