Jonathan Miller, president of the Miller Samuel Appraisers, said the weakness that started in the high end market has now spread to all price points.
“2015, 31 percent of the transactions in Manhattan in the third quarter were above asking price. Today, that’s about seven percent,” said Miller.
Donna Olshan, who tracks sales of properties that go for four million dollars and above, said contracts in January fell 16 percent from a year ago to its lowest level in six years.
Some of the weakness is due to oversupply. New York City went through a construction boom a few years ago.
But Olshan said the bigger cause is Trump’s new tax bill, which set a 10,000 dollar limit on annual local, state and real estate tax deductions.
“The minute they changed the tax law in the end of December 2017, the market went south,” said Olshan.
There are other concerns as well that are making buyers more hesitant.
It’s more expensive to finance a home today than it was a year ago, because mortgage rates are rising. Others have been hit by the volatility in the stock market and some are concerned about a recession down the road.
“Whenever there’s uncertainty in anything that an individual looks for they just take longer to process. So the way to think of this housing market is – there’s no sense of urgency. People are waiting and seeing what will happen next,” said Miller.
Olshan said sellers are going to have to lower their prices by at least 10 percent to attract buyers. A tough pill for sellers to swallow.
“They believe that if they buy Manhattan real estate they have a god given right to make a profit. Guess what – this is a market that is very humbling. It’s going to show you that we are a sector like others. Sometimes we go up, and sometimes we go down,” said Olshan.
More than 20,000 new units for rent and for sale are expected to hit the New York City’s market this year, exacerbating the city’s oversupply problem. That’s only more good news for those in the market to buy.