Manhattan home resales rebound after sellers agree to cut prices
Manhattan home resales climbed for the first time in a year and a half as sellers agreed to lower prices in order to seal deals before inventory and interest rates rise further.
Completed purchases of previously owned homes rose 7.7% in the first quarter from a year earlier, reversing a stretch of five consecutive periods in which resales declined, according to a report released Tuesday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.
Sellers who had been holding fast to ambitious pricing goals are softening their stances as they face the prospect of higher mortgage rates and more listings being added to the Manhattan market. In the three months through March, buyers of resale homes got discounts averaging 4.5% off the last asking prices, up from 2.7% reductions a year earlier, Miller Samuel and Douglas Elliman said. Discounts also increased for all other property types tracked by the firms — condos, co-ops, new development and luxury homes — as well as for the market as a whole.
"Sellers getting more relaxed with their pricing has certainly helped create a lot more transactions," said Pamela Liebman, chief executive officer of Corcoran Group, which released its own report on the market Tuesday. "With prices stabilizing, buyers feel that they're making a safer bet now."
Contracts to buy homes — both resale and in new developments — rose 3% in the quarter to 3,009 pending deals, Corcoran Group reported. Buyers, however, took their time to shop around and contemplate their investments. Homes whose sales were completed in the quarter spent an average of 103 days on the market, compared with 89 a year earlier, according to the brokerage.
The median price of all apartments that changed hands in the quarter was $1.1 million, a 3.3% drop from a year earlier, according to Miller Samuel and Douglas Elliman. The resale median was unchanged at $950,000.
While there were still bidding wars for some apartments, fewer purchasers were willing to pay more than the asking price. Of the 2,892 sales that closed in the quarter, 13% were for more than what the seller sought, Miller Samuel and Douglas Elliman said. A year earlier, 16% of buyers paid above the asking price, and two years ago, the share was 23%, according to the firms.
If buyers weren't feeling the urgency to strike a deal, it's because they have a lot of choices. There were 8,690 listings available in Manhattan at the end of March, a 9% jump from a year earlier, according to a separate report by brokerage Compass.
That hasn't stopped all sellers from testing the upper limits of the market. Asking prices for condos, for example, reached a record median of $2.5 million in the quarter, the third consecutive period a new high-water mark was set, Compass said.
Douglas Elliman brokers Tom Postilio and Mickey Conlon said they try to temper the exuberance of sellers who might see strong sales in the first quarter as a sign of bigger things to come.
"There are buyers who are savvy," Conlon said. "They've been in the market far longer than you've been in the market with your particular listing. When somebody comes to you and says 'This is the number,' we take that seriously because often the first offer is your best offer."
It was a strategy that worked well for the partners when they marketed Don LeoGrande's 33rd-floor condo at the Sheffield near Columbus Circle. The brokers said that two years ago, they would have listed it at $3.95 million and wouldn't have been surprised to see bidding reach as high as $4.5 million. Now the price was used to lure buyers who wouldn't search for an apartment at $4 million, and expect to bid well below that. LeoGrande said the plan was for it to be viewed as a bargain by overseas buyers hunting for a place on Billionaires Row, just two avenues east, where units are far more costly.
The best offer came in below the asking price, and after some negotiation, closed in January for $3.86 million. The Hong Kong-based buyers also demanded something else: all the furniture.
"I said, for that price, they've got all the furniture," said LeoGrande, an investor in small industrial and office buildings on Long Island. He had bought an apartment last year at 50 United Nations Plaza and was ready to relocate to what he called the quieter East Side.
"I made my decision that this was a fair price," he said. "And I just thought it was time to move on."