Manhattan’s real estate market is seeing a major shift. Prices for apartments are dropping, and the number of unsold units is rising. This trend is making Manhattan more of a buyer’s market, giving people looking to purchase homes more power in negotiations. Here’s a deeper look into what’s happening.

Apartment Prices Drop in Manhattan’s Real Estate Market

In the second quarter of 2024, the average sale price for real estate in Manhattan’s real estate market dropped by 3%, bringing the average price to just above $2 million. Median prices also fell by 2%, reaching $1.2 million. For luxury apartments, this was the first price drop in over a year. The once sky-high prices that were common in Manhattan’s real estate market are finally starting to cool off, which is great news for potential buyers.

More Apartments for Sale and Longer Wait Times

One of the main reasons for the price decline is the increasing number of apartments for sale. Currently, there are over 8,000 apartments on the market, which is much higher than the 10-year average of 7,000. Apartments are also taking longer to sell. Manhattan now has a 9.8-month supply of apartments, meaning it would take almost 10 months to sell all available apartments if no new listings were added. When the supply is over six months, it’s a sign of a buyer’s market, giving buyers more choices and better deals.

Manhattan’s Real Estate Market Contrasts National Trends in 2024

While prices in Manhattan are falling, the rest of the U.S. real estate market is experiencing something different. Nationwide, housing supply remains tight, and prices are staying high. Manhattan’s unique market, which saw a big price surge post-COVID, is now feeling the effects of higher interest rates. Buyers and sellers are adjusting to the new reality. Both sides are realizing that they can’t wait forever, leading to more sales as they meet in the middle of price expectations.

More Sales and High Rents Driving the Market

In the second quarter of 2024, there were 2,609 real estate market sales, marking a 12% increase compared to the previous year. This was the first increase in sales in two years. High rental prices in Manhattan, which averaged over $5,100 a month in May, are encouraging more people to buy instead of rent. As rents continue to rise, especially in the summer, many renters are deciding it’s time to enter the real estate market, hoping interest rates will drop in late 2024 or early 2025.

Luxury Market Feels the Biggest Impact

The luxury market, which includes the top 10% of high-end apartments, is seeing the most significant changes. Prices for luxury apartments dropped by 11% in the second quarter, and the number of available luxury units jumped by 22%. Wealthy buyers are holding off on purchases, possibly due to uncertainty surrounding the upcoming elections. While it’s unclear if this is a temporary trend or something that will continue, the high-end market remains the weakest part of Manhattan’s real estate scene.

In summary, Manhattan’s real estate market is entering a buyer’s market, with prices falling and inventory rising. This shift is giving buyers more options and better deals, especially as rents remain high and luxury apartments see the most significant price drops.