Co-op and Condo Sales Take a Dive in Manhattan and Brooklyn
Nov. 4, 2022 — Sales of luxury apartments are especially hard hit as market cools off.
The looming end of Daylight Savings Time isn't the only thing casting a shadow on co-op and condo sales. Inflation — and the steadily rising interest rates designed to combat it — have sent apartment sales into a nose dive in Brooklyn and Manhattan. It looks like the city's real estate market is in for a long, chilly winter.
The number of Manhattan sales that went into contract last month declined by 50% from — to 596 from 1,188 in October 2021, according to new data from Douglas Elliman, as reported by Crain's. About 60% fewer condos were sold, and co-op sales dropped by more than 40%.
The news was even darker in Brooklyn, which reported 58% fewer co-op and condo deals last month compared with a year ago.
Especially hard hit across both boroughs were sales of luxury apartments priced at $4 million or more. Properties asking between $5 million and $20 million reported nearly 80% fewer deals.
Jonathan Miller, the report's author, says the drop has a lot to do with the current high-interest-rate environment, in which would-be buyers are holding off on purchasing. The Federal Reserve Bank raised interest rates another three-quarters of a percent earlier this week.
In normal times, limited deal activity bolsters the amount of inventory on the market, but homeowners in Manhattan have been putting fewer listings up for sale than last year, the data shows. The more expensive properties reported the lowest levels of inventory.
“That’s the case because sellers, just like buyers, are looking at rates,” Miller says. “If they sell now, they’re going to lose their favorable financing, and that keeps new products from coming onto the market.” Result: a supply drought, especially at the high end of the market. Just six condos and three co-ops priced at $20 million or more were listed for sale last month. In October 2021, 10 of each were marketed for sale.
The number of listings in the past 12 months peaked in March, with more than 1,100 co-ops and just over 900 condos. Between September and last month, listing activity in Manhattan declined by one-third. That spring surge in the market now seems like it happened a long time ago.