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Manhattan Real Estate: Prices Plummet, Sales Tank

The Manhattan skyline is seen from the Brooklyn Bridge following a downpour in New York City on May 15, 2018. (Photo by HECTOR RETAMAL / AFP) (Photo credit should read HECTOR RETAMAL/AFP/Getty Images)
HECTOR RETAMAL / AFP

Donald Trump may have picked a very good time to take a break from developing luxury real estate in Manhattan.

Manhattan real estate suffered its worst second quarter since the financial crisis, with prices and sales dropping and inventory rising, according to a new report from Douglas Elliman and Miller Samuel Real Estate Appraisers and Consultants.

Sales of Manhattan co-ops and condos fell by 16.6 percent in the second quarter compared with the period a year ago, the third consecutive quarterly decline. The median sales price declined 7.5 percent to $1.1 million, according to the report.

Tax law may be playing a role in what Douglas Elliman describes as a “reset” for Manhattan real estate. The Trump administration’s tax reforms slashed a tax break for high-end homes, even while cutting tax rates on wealthy individuals and cutting corporate taxes.

Another factor is the end of global coordinated growth. While the U.S. economy is thriving and New York City is doing well, economies around the world are slowing down. This has sapped some of the demand from international buyers. What’s more, U.S. and foreign governments have been cracking down on the use of New York real estate to hide assets or launder money, long a major use of expensive New York City homes.

Douglas Elliman also blames Uncertainty Faeries for the declines. “Uncertainty continued to play an important role in the current housing market,” it says. Many business l and politicians insist that uncertainty holds back business investment but recent history and economic theory suggests that uncertainty.

The decline may be far from over because even as sales and prices have fallen, inventory is rising. Inventory rose 17 percent, the 10th consecutive quarter of year-over-year inventory increases, according to Corcoran. Co-op inventory was up 26 percent year over year and resale condo inventory rose 11 percent. Even new development inventory rose four percent.

 

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