Manhattan Real Estate Market Report: 1Q 2023

“In many instances, this is the moment buyers have been waiting for; sellers are finally getting realistic and Manhattan prices are the lowest they’ve been in years. With buyers gravitating towards value, sales under $1M made up 50% of closings. There is also demand for new inventory if you are looking to sell. The number of for-sale apartments is at a near five-year low and potential home seekers are finding less than half of the new listings they did a year ago.”

Pamela Liebman, President & CEO, Corcoran

1Q 2023 reinforced the newfound challenges that face the Manhattan market.

  • A variety of economic factors caused trepidation among buyers, especially interest rate hikes, stock market fluctuations, and the recent bank collapses.
  • In turn, many sellers reacted to diminished demand and longer marketing times by lowering prices and deepening negotiability.

Market-wide closings are down 38% YOY, returning to a pace seen during the first quarters of historically slower years from 2018 through 2020, but we saw a notable uptick in activity starting in mid-February.

  • This time last year, sales reached a fourteen-year first quarter record high, exaggerating the YOY decline we’re seeing.
  • 1Q 2023 registered 2,500 sales and while the overall number of contracts signed was also significantly below last year (-34%), the Manhattan market gained some momentum during the quarter.
  • The YOY decline in contracts tightened from 37% below 2022 in January to 20% in March, with a notable uptick in activity starting mid-February.

Unsurprisingly, slower sales and an uncertain market outlook caused inventory to increase 3% annually to 6,120 active listings.

  • Notably, the YOY increase in inventory is in comparison to a five-year low and inventory is still 13% below the historical first quarter average.
  • Furthermore, the annual increase in listings was attributed only to those priced over $1M, which grew 12%.
  • Listings priced under $1M fell 13% annually. This inventory constraint in lower cost price segments is likely also a contributing factor causing fewer sales.

Average and median price declined for the second consecutive quarter with sales under $1M making up 50% of Manhattan closings, their highest market share in three years.

  • The increased price sensitivity in the market expanded sales at the low-end, particularly resale co-ops, which declined at a slower rate than other types.
  • Smaller, lower-priced residences had seen their demand erode in the post-pandemic recovery as buyers sought larger spaces and took advantage of low mortgage rates.
  • This drove median price to its lowest point since the market pause and average price to a two-year low.
  • Conversely, average price per square foot of $1,890 was supported by sales in super-prime locations, reaching its second-highest level in four years.

Read the full report.

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