- Flickr/Anthony Quintano
Fewer people are buying condos in Manhattan because they have more choices and can more easily reject exorbitant prices.
The number of sales closed in the borough slumped by 18.6% during the third quarter, according to a report from Douglas Elliman Real Estate released on Tuesday.
Resale inventory surged 8%, while the number of newly built units spiked by 27%, to nearly 1,000, giving buyers more options.
“The year over year surge in new development inventory was a significant change in direction after four consecutive quarters of year over year declines,” the report said.
“The declines had ranged from 31% to 49% as developers pulled inventory from active to shadow status to prevent their offerings from seeing extended marketing times.”
In the luxury end of the market, fewer apartments with “aspirational prices” that would profit from strong buyer demand were listed on the market, shrinking the available inventory in that price range, the report said.
Across co-ops, condos, and luxury developments, apartments were listed on the market for longer during Q3 compared with the same quarter a year ago.
Also, the share of sales that were more expensive than the list price at the time of contract fell to 17.4% after hitting a record of 31% in the second quarter.
Manhattan developers remained more willing to put up new developments with more expensive units priced above $10 million. Sales moved in tandem, too, with 80 closings at that price level during the quarter – the most since 2008.
It’s still more profitable for builders to put up luxury housing. Because the costs of land, labor, and building materials have gone up, developers have less motivation to build apartment units in the more affordable price range of the market.