More Homebuyers in Manhattan Are Paying in Cash, a New Report Says
Recently, more Manhattan homebuyers have been splashing down cash for their new abodes.
In the past three months through June, about 65 percent of purchases were made without financing, an increase from 57 percent in the first quarter. It is the largest share seen since appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate began keeping track of payments back in 2014, Bloomberg reported.
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Prospective home owners have chosen cash as mortgage rates have been holding steady at near double the levels they were in early 2022. Additionally, sellers who want to wrap up deals may be incentivized to choose offers from bidders who don’t need loans. The trend “reflects continued relative strength at the upper end of the market that favors cash,” Jonathan Miller, president of Miller Samuel, told the publication.
The median price for deals involving the luxury tier—the top 10 percent of the market—that were completed in the second quarter was $6.7 million, an increase of 3.9 percent from a year earlier. Unfortunately, overall sales in the niche market have declined 40 percent compared to a year ago. However, Miller reminded Mansion Global that the second quarter of 2022 was like a “rocket ship.”
“Every month we’re seeing these declines, but we have to remember that in the second quarter of 2022, there was a huge level of activity,” he said. “It was the second most sales in history, and then sales sort of carried into the summer of 2022. But in the last couple of quarters, sales have been fairly consistent with what we have now.”
Luxury real estate company Brown Harris Stevens—which also released its Manhattan Q2 2023 Residential Market Report Thursday—gave other reasons for being hopeful about the market.
“The biggest reason for optimism is the dramatic reduction in inflation over the past year,” the company’s CEO Bess Freedman said in the report. “While mortgage rates haven’t come down as much as expected during that time, we believe that will change in the coming months. Don’t expect to see 3 percent 30-year rates anytime soon, but then again, we don’t need record-low rates to have a healthy housing market.”
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