The scarcity of luxury flats in Manhattan is driving up costs.
A scarcity of luxury apartments in Manhattan is driving up prices at the top of the market, even as rising mortgage rates put downward pressure on overall apartment sales and prices.
According to fresh statistics from Douglas Elliman and Miller Samuel, Manhattan apartment sales declined 23% in the third quarter as rising mortgage rates put a damper on potential purchasers. The median and average sales prices of Manhattan apartments remained unchanged, with the average price remaining at $1.96 million and the median price remaining at $1.15 million.
The top end of the market, on the other hand, has experienced a significant decline in supply and higher pricing.
According to Miller Samuel, the supply of luxury flats — defined as the top 10% of the market by price — has decreased by 24% compared to pre-pandemic levels. The inventory of premium residences for sale was at its lowest level in the third quarter in five years.
According to Jonathan Miller, CEO of Miller Samuel, high-end purchasers are less susceptible to mortgage rates since they frequently pay in cash. As a result, the rich have continued to buy and benefit from lower pricing.
Simultaneously, since the pandemic, newly constructed condo buildings have been the primary engine of high-end purchases. Most of those new, high-priced condominiums have already been sold, and few new projects are being launched as a result of a shortage of bank credit.
“A lot of that new development inventory sold off during the pandemic boom,” added Miller. “The higher end of the market is seeing much less of a contribution from new development sales.”
With fewer new luxury condo towers under development, brokers predict that high-end values will continue to climb or remain robust.
According to Serhant, nine Manhattan residences valued at $20 million or more were sold in the third quarter, up from only two in the same period previous year.
According to Miller Samuel, median prices for luxury apartments have risen in three of the last four quarters. In Manhattan, however, total median prices have fallen for four quarters in a row.