Let’s take a look at how Q1 of 2018 performed in the Manhattan Luxury Real Estate market. With the total number of sales at 2,180 the first quarter fell 24.6% compared to the same time last year where we saw 2,892 sales in Q1.
In terms of pricing, the average sales price was down 8.1%, $1,933,198 versus $2,104,3,50 in 2017. We also saw that the average absorption rate(the number of months it would take to sell the inventory) rose 37.7%. This means that it took an average of 8.4 months for inventory to sell versus 6.1 months in 2017. Q1 also saw the highest number of days on the market for resales in 3 years at 96 versus 86 year over year.
$4M+ Manhattan Luxury Market
The luxury market defined as “$4 million and over” saw a positive trend in Q1. The market share of luxury resales was at its highest level in 2.5 years. Luxury resales represented 52.4% of the Q1’s luxury sales, with a median price of $5,250,000. Inventory rate in the luxury market rose at twice the rate of the overall market with a 15.4% rise versus 4.3% for the overall market.
Manhattan New Developments
New Developments had a 47.6% market share of the luxury market with a median price of $7,420,904. However, New Development sales fell 54% with 259 sales versus 563 in Q1 2017. Inventory in this sector continued to rise over the last 7 consecutive quarters with 1,059 apartments versus 1,008 in 2017.
What caused these weak numbers? There are several factors when added together caused a drop-in sales. The new federal tax law had an effect on the mindset of buyers and sellers and the rise in mortgage rates affected a segment of buyers. In addition, new development market was affected by drop in “legacy” contracts that were signed in the peak of the market.
What to Expect in Luxury Real Estate
Here is how I see the market now and for some time in the future! Buyers and sellers are in a period where they are adjusting their interpretation of value of properties. Buyers have a lot of options since inventory has risen and the pace of the market slows. Correct pricing is critical in this market. This market represents great opportunities for buyers. Those who don’t take advantage of this market will regret it years down the road!