The Manhattan residential real estate market got off to a slow start in 2023 but gained momentum in the second quarter, rebounding from a sharp decline of nearly 40% in sales volume compared to a year ago because of the sharp rise in interest rates. The market showed noticeable improvement from the first to the second quarter of 2023, with sales volume increasing by 4% and median sales price rising by 11%. The increase in median prices was primarily driven by a larger than usual proportion of properties in the $4-10 million price range.
As the market gained momentum, it transitioned from a buyer's market to a balanced market that neither favored buyers nor sellers. Buyer activity had a notable increase in the second quarter, as signed contracts rose by almost 22% from the first quarter. Certain neighborhoods and properties continued to be in higher demand compared to others, with buyers showing a preference for neighborhoods located below 96th Street rather than neighborhoods in Upper Manhattan. Buyers continued to show a strong preference for renovated properties and were willing to pay a premium of 27% last quarter, which is the highest spread in nearly a decade.
The current market is a price-sensitive one. It is crucial for properties to be appropriately priced from the outset to align with current market conditions to avoid languishing on the market. Sellers are strongly encouraged to have their properties in tip-top shape prior to listing in order to help attract buyers and facilitate accepted offers.
Potential buyers are advised to begin their property search in the near term rather than delaying in anticipation of interest rates falling to more favorable levels. Waiting for a decline in interest rates will likely result in competing against a surge of buyers entering the market, thereby strengthening the position of sellers and intensifying competition among buyers.
