Manhattan Homebuying Market Echoes 2009 With Supply Pileup

(Bloomberg) -- For Manhattan home sales, it's beginning to look a lot like 2009.

Unsold listings in the third quarter surged to 9,319, a level not seen since the midst of the global financial crisis 11 years ago. It would take 20.3 months to clear all the available inventory, the longest stretch since 2009 as well, a report by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate shows.

Closed sales are still happening at a snail's pace. For deals that were completed, average buyer discounts were the highest in a decade.

Manhattan remains a tough sell in the pandemic era as buyers weigh their commitment to New York City's costliest borough. Midtown offices are largely shuttered, and restaurants and cultural attractions are running at limited capacity. With home-shoppers' choices piling up, the deals getting done are the ones that are marked down.

“At a certain price, the consumer says, ‘I'd be crazy not to do this,'” said Steven James, chief executive officer of Douglas Elliman's New York office.

Read more: New York Homebuyers Are Searching Everywhere But Manhattan

Discounts from the last asking price averaged 8.9%, the largest since the second quarter of 2010, when the average was 9.1%. The figures don't account for earlier cuts or credits offered at closing. Luxury sales -- the top 10%, or those priced at $3.9 million or higher -- got reductions averaging 12%.

While closed transactions across all price levels tumbled 46% to 1,375, the prospect of a bargain lured some high-end buyers into the market. Their purchases pushed the median price of all Manhattan sales up 7.3% from last year's third quarter. The median for luxury deals jumped 23% to $5.9 million.

Buyers “are looking for price reductions, and in many cases, they're getting those price reductions,” James said. “And once they get them, they're willing to move forward.”

Across all property types, one- and two-bedroom units accounted for the largest share of available listings, with about 3,000 of each, Corcoran Group said in its own report.

That creates opportunities for first-time buyers who might have been priced out of the market just a year ago, said Corcoran CEO Pamela Liebman.

“There are lots of young people out there saying, ‘Wow, I can really afford New York,'” Liebman said.

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