A report by appraiser Miller Samuel Inc. and Douglas Elliman Real Estate reveals that the share of Manhattan home purchases made in cash rose to 57% in the first quarter of 2023. This is the highest percentage recorded in nine years.
Several factors contribute to this trend, including the high cost of Manhattan real estate, the availability of cheap debt, and the growing number of wealthy investors seeking real estate investments.
The increase in cash buyers is affecting the Manhattan housing market in multiple ways. It creates challenges for first-time homebuyers who rely on financing and struggle to compete. Moreover, the influx of cash is driving up prices as sellers are more inclined to accept cash offers over financed ones.
Nevertheless, the rise in cash buyers also indicates strength in the luxury market. Cash transactions tend to dominate when the market feels less fluid. Consequently, cash buyers are more likely to pay a premium for a property, helping to stabilize prices during a downturn.
The long-term implications of the cash buyer trend remain uncertain. However, it is evident that they currently exert a significant impact on the Manhattan housing market.
Here are some additional details from the report:
- The median price of a Manhattan home sold in cash was $3.6 million in the first quarter, up 12% from a year ago.
- The share of cash buyers was highest in the luxury market, with 72% of homes priced above $5 million sold in cash.
- The increase in cash buyers was driven by both domestic and international buyers.
