(Bloomberg) -- Manhattan resale home prices tumbled by the most in more than four years, a sign that sellers are lowering their expectations in a slowing market where buyers have the option to walk away.
The median price of previously owned condominiums and co-ops fell 6.3 percent in the fourth quarter from a year earlier to $900,000, according to a report Wednesday from appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. It was the first annual decline since the beginning of 2015, and the biggest since the third quarter of 2012, when resale prices dropped 8.1 percent.
Manhattan apartment sellers who set aggressive price goals over the past few years are coming back down to earth as inventory mounts. They’re adjusting to a market in which the number of resales has been dropping for five quarters and buyers are turning away from listings viewed as too expensive. In the fourth quarter, the average discount off the last asking price was 4.7 percent, compared with a 3.1 percent cut a year earlier, the firms said.
“Maybe we’re heading out of the period when there was no shame in overpricing your home,” Jonathan Miller, president of Miller Samuel, said in an interview. “We’re moving away from that and into something more pragmatic: Do you want to actually sell your property or do you want to pretend? Part of selling is pricing correctly or being more negotiable.”
Buyers agreed to pay more than the asking price in just 13 percent of all sales that closed in the quarter, down from 29 percent a year earlier, the firms said. They also are taking longer to make a decision: Previously owned properties that sold in the period spent an average of 80 days on the market, up from 71 days a year earlier. Manhattan resale deals totaled 2,385, a decline of 1.5 percent.
“We saw buyers acting a lot more aggressively with their bidding,” said Pamela Liebman, chief executive officer of brokerage Corcoran Group, which released its own report Wednesday that showed a decrease in sales for the quarter. “They didn’t hesitate to come in and make low offers. A lot of sellers remained unrealistic throughout the year, and that killed a lot of deals."
Rex Gonsalves, a broker with Halstead Property, thought $715,000 was a fair price for a one-bedroom co-op apartment in Chelsea with an outdoor patio. But after one month on the market, the best offers that came in were about 30 percent lower, he said.
The sellers agreed to cut the price twice in two months, bringing it down to $649,000. That attracted two offers -- one below the asking price and one above it, Gonsalves said. The 16th Street apartment sold in December for the higher price, $659,000.
“This isn’t a market where you go into a bidding war,” he said. “When we got this offer over ask, the sellers said, ‘This is great.’ It really helps to have savvy sellers, who understand the market.”
Halstead, which released a joint report with brokerage Brown Harris Stevens, said the average price of resale co-ops fell 2 percent from a year earlier to $1.25 million, while the average for resale condos remained about the same, at $1.99 million.
Inventory in Manhattan -- both resale and new-development homes -- climbed for a fifth consecutive quarter, Miller Samuel and Douglas Elliman said. There were 5,393 apartments on the market at the end of December, up 6.9 percent from the end of 2015.
The number of choices, combined with the prospect of rising interest rates, could mean a more robust year of sales ahead as more sellers reduce prices, Miller said.
“Perhaps their resolution for 2017 is to be in sync with the market,” he said. “You price it correctly, it sells.”
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