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Manhattan Home Prices Fall Under $1M—but Why?

A luxury-condo boom is only part of it
By Neal Colgrass,  Newser Staff
Posted Jan 6, 2019 6:46 AM CST
The residential skyscraper One57, a gleaming 75-story glass high-rise on West 57th, sits behind the once low-budget Park Savoy Hotel, center, in a Manhattan neighborhood of sprouting luxury towers dubbed...   (AP Photo/Bebeto Matthews)

(Newser) – What a deal, folks: You can now buy a Manhattan home for less than $1 million. The city's median price for condos and co-ops in the fourth quarter slipped 5.8% from a year before and hit $999,000, the first sub-million mark since 2015—and those who sold cut their prices an average 6.2% from the last list price, Bloomberg reports. "We had a number of cases where a lot of people came back for second and third visits, and never made an offer, and it's totally and completely tied to pricing," says an exec at the real estate firm that revealed the price drop. "Many sellers still have not gotten the message. I think many more sellers in 2018 got the message, and those who got the message sold." The real question is why, and here media reports differ somewhat.

A luxury-condo boom definitely played a role by glutting the New York market and giving buyers more options, per the Financial Times. New US tax laws also hurt homebuyers by capping property-tax deductions at the same time interest rates went up and stocks fell. Plus sluggish economies abroad have warded off some foreign buyers, per CNBC. But the market's dip also matches a decline seen in Denver, Seattle, and San Francisco, where houses have sat on the market for weeks and sold for less than expected. Why? Experts see a wage issue: "The local economy is still fantastic ... but obviously wages are not keeping pace," a Denver realtor told the New York Times in September. "As the market continues to move up, buyers are being pushed out." (A home listing's racy photos created a buzz near Houston.)

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