• The sales contracts for co-ops and condominiums in Manhattan decreased by 30% in the quarter.
• Wealthy purchasers are more alarmed by stock market drops.
• Rising borrowing rates and concerns about the economy are making consumers hold off.

Manhattan apartment sales contracts fell by over a third in June as recession worries and falling stock prices caused the city’s once-hot real estate market to cool.

Through the early spring, New York real estate saw high prices and brisk transactions. According to information from the companies Miller Samuel and Douglas Elliman, the median sales price for the second quarter increased to a record $1.25 million. With almost 3,800 transactions, the second quarter’s total was the biggest since the 2007 housing boom.

However, the majority of those agreements were reached in the beginning of the year. Brokers and property analysts claim that in June, as stocks and cryptocurrencies fell, interest rates increased, and economists began speculating about the possibility of a recession, the Manhattan real estate market took a sudden swing in the wrong direction.

According to Miller Samuel and Douglas Elliman, the number of sales contracts for co-ops and condominiums in Manhattan decreased by 30% in the quarter compared to June 2021.

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Frederick Warburg Peters, president of Coldwell Banker, noted in a market analysis that the slowdown “has accelerated during the second quarter: fewer signed contracts, fewer bidding battles, more price reductions, and a progressive increase in available inventory.” The city’s entire spectrum of price points and boroughs are affected by the slowly declining sales market.

Given that the market is oriented toward higher-end, richer purchasers who are less dependent on mortgages and rising rates, Manhattan’s collapse is particularly abrupt. 53 percent of all Manhattan apartment purchases during the second quarter were made with cash. For the most expensive items, the percentage is much higher: 99.6% of transactions over $4 million were made with cash, according to Jonathan Miller, CEO of Miller Samuel.

Brokers claim that rather than increased mortgage rates, wealthy purchasers in Manhattan are more alarmed by stock market drops and cryptocurrency losses. There are also ongoing worries about New York’s crime and expensive taxes.

According to Bess Freedman, CEO of Brown Harris Stevens, “this is a market in transition.” “At the moment, buyers are in control. Simply said, there is a lot of uncertainty and reduced confidence.

At least not much, prices have not yet started to decline. Brokers claim that numerous offers and buyer attendance at open houses have all but disappeared. Top Douglas Elliman broker McKenzie Ryan said one of her clients is a Manhattan family seeking for extra room with a budget of about $4 million after having a baby.

Ryan said, “They just decided to completely abandon their hunt.” “They still need the room, but rising borrowing rates and concerns about the economy are making consumers hold off.”

Open houses and showings aren’t drawing as many buyers as they did even in April. She claimed that during that month, she had a listing that brought 31 visitors to the open house. In June, she had an open house for a comparable listing at a comparable price, but only four individuals turned up.

Along with buyers in the finance industry who are concerned about the financial markets, employees and executives in tech and venture capital in Manhattan are also deterring from buying real estate out of concern for job losses and budget cuts.

My tech clients are simply preparing for whatever comes, Ryan added. “Since the beginning of the year, some people have suffered a sharp decline in wealth.” According to Ryan, sellers cannot use comparable prices from earlier in the year when pricing their listings at the present time. According to her, some are marking them down by as much as 10% from early 2022 comparables, but it varies by apartment.

There is simply not enough data available at this time, she claimed. “It’s just shifting and going so quickly.”

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