Manhattan Homebuyers See More Bidding Wars in Still-Hot Market

(Bloomberg) -- Manhattan apartment sales continued their hot streak in the first quarter, with rising demand clashing up against an inventory crunch to stoke bidding wars in a growing share of deals.

Purchases completed above the asking price made up 9.3% of all transactions, the highest portion in four years and up from 3% in the first quarter of 2021, according to a report Tuesday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.

Competition was intense in the luxury market, which saw its second-highest rate of bidding wars in the five years the firms have been tracking the data. Luxury listings -- representing the top 10% -- fell annually for a third straight quarter and stayed below pre-pandemic levels.

In all, purchases of Manhattan co-ops and condos totaled 3,585, the most for a first quarter in more than three decades of record-keeping by Miller Samuel. Deals jumped 46% from a year earlier, when Covid-19 restrictions and remote-work policies made the city unattractive for some buyers.

Now more workers are getting called back to their offices, and Manhattan's cultural life is encouraging buyers to commit to a place in the city.

“The market is not as frenzied as it was, but the market pace is unusually fast,” said Jonathan Miller, president of Miller Samuel. “It's still blistering, really.”

Inventory was down 4.4% from a year earlier to 6,906 apartments available at the end of the quarter. At the current pace of deals, it would take 5.8 months to sell all those homes. That's well below the 10-year average of about eight months, according to Miller.

The median price of deals that closed in the quarter was $1.19 million, up 11% from a year earlier. About 47% of purchases were made in cash -- in line with the market's average and a sign that rising mortgage rates won't devastate demand, Miller said.

In its own report on Manhattan home sales, Coldwell Banker Warburg said it anticipates more apartments to hit the market in the spring, a time of the year when buyers also come out of hibernation. Demand may be especially high among shoppers looking to lock in rates before they climb further, the brokerage said.