If you’ve been interested in Manhattan real estate, you likely already know that property prices have been down in recent years. A new report by the appraisal and research firm Douglas Elliman and Miller Samuel show that the dip has continued in the first quarter of 2019 and is expected to continue.
While a downtrend may be daunting if you’re looking to enter the market, you still have options. You don’t have to let the market dictate your plans, and there are many avenues you can still pursue. A down market comes with its own challenges and opportunities that largely remain true across regions, so we’ve created this guide to help you navigate them.
Why is Manhattan Real Estate Down?
The report by Douglas Elliman and Miller Samuel outlined some of the problems with Manhattan real estate. The market suffered its worst quarter since the Great Recession with total sales falling over 3 percent. This is the sixth quarter in a row that sales have declined, making it the longest such trend in over 30 years.
While markets are complex, there are a few factors contributing to the downturn. The major causes are a surplus of high-end properties, a decrease in foreign buyers, and skittishness caused by a new federal tax law that impacts real estate in places with high state taxes. This has led to price drops on most classifications of property. The median price for a one-bedroom apartment in Manhattan dropped from $0.86M to $0.80M and the price for a two-bedroom apartment in Manhattan dropped from $1.70M to $1.55M.
Selling in a Weak Real Estate Market
The behavior of sellers also contributes to dipping prices. Sellers with expectations that aren’t attuned to the market hold off on making a sale, meaning that listings pile up and sit on the market longer.
While it may be tempting to let a unit sit on the market until you get the perfect offer, this is often a trap. Properties are investments like any other and pride can prevent people from making proper evaluations.
Keep in mind that there are factors beyond the sales price in whether or not you come out ahead on a property sale. The equity in a sold property could go into an appreciating asset rather than continuing to fall in a down market. This is especially true in Manhattan as the market is not likely to improve in the near-future with the additional challenges caused by the mansion tax.
On top of what you may lose by letting your property sit on the market you also want to keep in mind that if you’re interested in selling in order to buy a larger property, the prices of the properties you’re interested may be down as well. And even if you’re only looking to sell, you may still be ahead on the initial purchase depending upon when you first purchased the property.
Buying in a Weak Real Estate Market
While there are challenges to clear on the seller’s side, that just means it’s a better time to buy real estate in The Upper East Side. The increased number of listing and lower sales prices make this a buyer’s market. If you’re interested in buying, then this could be your perfect opportunity, but there could be a few things holding you back from jumping into the market as well.
You may be worried about the downtrend continuing to lower the value of the property after you’ve bought it. It’s important to keep in mind when watching real estate prices that it’s a long-term investment real estate is a long-term investment. There’s no telling for sure what the market will look like in 5 to 10 years. What goes down must go up after all. Plus, it’s important to watch the rental market as well. When it comes to Manhattan, while overall sales have decreased, over the past year rental prices for properties have risen more than 5 percent.
With this information in mind, you’ll be more able to navigate weaker real estate markets. Whether you’re looking to buy or to sell, it’s important to view all of your options with sobriety.
Looking to buy or sell in Manhattan? Then look no further, William Bolls and knowledgeable team are here to help with their years of experience. As a full-service real estate firm, their hard work and dedication have gotten their property sales and listings featured in the New York Times and Brokers Weekly. Reach out to William today at (212) 405-1468 or [email protected]
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