Sellers Beware: Negotiability Peaking as Manhattan Real Estate Market Slows Down

(Michael Holt | Holt's Monthly Market)

According to our analysis with our independent market analysts at Urban Digs, the Manhattan real estate market is currently in the "sell zone" for the Spring active season, which means that sellers may be experiencing the highest level of contract activity and leverage that they will see during this season. This is especially important for sellers who are currently listed on the market, as the active season may be shorter than usual.

The Market Pulse is Flat/Slightly Declining

Additionally, our UD Market Pulse, which measures the ratio of pending sales to active supply to gauge leverage, has remained mostly flat or slightly declining, indicating that the market's momentum is not sustainably upward. This is due to the fact that the rolling 30-day deal volume pace did not stay above the 1K level long enough to generate upward momentum.

Manhattan Market Pulse chart through 2022, with the latest reading at 0.4 and an annotation noting recent weakness.

Contract Activity is Fading

The Liquidity Pace chart provides a real-time view of the market's activity by tracking the total number of deals signed in the last 30 days. It is a key indicator of the Market Pulse mentioned earlier, and currently, it appears to be plateauing instead of trending consistently above the 1K mark, which is concerning. Even though it is the busy season, the market seems to be stuck in the neutral range of liquidity.

Manhattan liquidity pace chart with high, neutral, and low zones and buy and sell annotations.

Negotiability Improved, but Likely Peaking for Sellers

According to the most recent negotiability data, deals that were signed in February and have now closed had a median discount of 5% from the original ask. This represents a decline from the 6.7% observed in January and 7.4% in December. However, this trend is subject to change in the coming months as the data for April and May become available. It is expected that discounts may rise during the summer months. The chart below is one of my favorites as it shows the percentage discount from the original asking as well as the last asking price. As a pricing strategist, the relation of the days on the market to these below metrics is crucial in developing pricing strategies however generally the longer a residence is on the market the further the discount. Contact me if you'd like a specific report about this (it can be specific to bedroom count, neighborhood, price point, and neighborhood).

Chart of Manhattan listing discounts at contract signing, with original-ask discounts peaking at 7.4% in December 2022.

Advice For Sellers

It appears that peak liquidity and price action have already passed, based on real-time data. Late March and early April saw the highest deal volume for this Spring season, and it is likely that monthly contract activity will be below the historical trend for this time of year.If you are a seller, you have 30-45 days before the traditional summer slowdown, so it's important to act quickly with price cuts. Since deal volume is decreasing and seasonal leverage is diminishing, the best approach is to create a sense of urgency among buyers by pricing at or slightly below the market. Remember to pay attention to what the markets are telling you. If the property is truly worth what you think, the market would reflect it.

Advice For Buyers

If you're a buyer who has a pressing need to buy or has found a perfect property and is actively bidding, you may be relieved to know that negotiability has slightly improved compared to 30-45 days ago. According to listing discount data, February signed contracts had a median discount of around 5%, which is a decrease from 7% in December. The chart above indicates that the cycle bottomed out from November to early January and rapidly picked up momentum recently, leading to lower discounts as liquidity returned to the market. However, it seems that the current uptrend momentum in the season is peaking, and buyers are likely to see leverage and negotiability slowly tilt back in their favor. If you're a contrarian buyer seeking the next optimum leverage opportunity, keep an eye out for properties with longer-than-average days on the market.

Thank You

We appreciate you taking the time to read our blog. At The Living New York, we are passionate about the real estate market and work closely with leading analysts to provide reliable information. If you have any questions about the content of this article, the current market conditions, or what sets us apart as one of the top real estate agents in NYC, please feel free to contact us. Our areas of expertise cover a wide range, from Upper East Side real estate to West Village real estate and everything in between. We are interested in learning more about your goals and what you envision for your living situation. Check out our buying power tool here and discover why you should choose The Living New York for your next listing here.