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According to the Olshan Report, Manhattan luxury homeowners are lowering asking prices and striking deals with buyers.

The reports says that both apartments and townhomes that were in contract the last week of April had an average of a 16% price cut, which is one of the highest average discounts in the past year. Those that are typically much more stubborn are still negotiating prices, in order to be free from the inventory. According to the report, since the beginning of 2018, luxury homes have been on the market for an average of 446 days before selling. At the same time, the listing has been cut an average of 9% before the buyer was found.

Buyers are realizing that home prices aren’t climbing as much as they used to, so they can afford to be pickier. Buyers realize that housing prices are staying flat, so they can put in lower offers and see what can deals can be made. The second reason is that the rise in interest rates makes borrowing more expensive and there are limits on the amount of tax deductions gained from home ownership. Many buyers are realizing that homeownership can cost more than before, which means they either push back on a seller’s price or walk away from the deal completely.

In addition to buyers having a stronger negotiating position, they are also seeing more value in co-ops in Manhattan. The co-ops tend to be lower priced than other condos, and are one of the categories where sales are slightly increasing. With sales decreasing, many sellers are getting wake-up calls that they do need to cut prices on their luxury condos in order to get noticed by a buyer.

Rents are also dropping due to an oversupply in the market, especially for luxury homes. There has been a lot of overbuilding, and sellers have to cut prices in order to reign in buyers. Data compiled by real estate appraisers show that one-third of the decline in home sales can be attributed to oversupply from the boom in construction. The rest is due to buyers who are reluctant to purchase as the market resettles from the new tax law for mortgages. The new tax law affects luxury markets, especially those in Manhattan. The median sales point in the city is $1.08 million, and the tax law lowered the deductible mortgage interest for mortgages up to $750,000, instead of $1 million.