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New York City Market Slows to Pre-Pandemic Lows
New York City Real Estate Rundown November 9th
Thomas Moran
November 09, 2023
Market Pulse
Last week in Manhattan, the luxury real estate market saw a notable uptick in activity, with twenty-four contracts signed for properties priced at $4 million and above, doubling the total from the previous week. In this active week, condominiums were more sought after than co-ops, with 13 condos, 7 co-ops, 3 condops, and 1 townhouse making up the sales. This surge in transactions indicates a robust interest in high-end real estate, underscoring the enduring appeal of Manhattan's luxury market.
Key Statistics for Last Week's Luxury Real Estate Contracts:
Total Weekly Asking Price Sales Volume: $173,862,400
Average Asking Price: $7,244,267
Median Asking Price: $5,897,500
Average Discount from Original Ask to Last Asking Price: 6%
Average Days on Market: 803
Top Sale
The top sale of the week was a standout transaction at 50 West 66th Street, where unit 43N, a luxurious condo, was contracted for $23.25 million. This property, which began marketing off of floorplans in the summer of 2022, encompasses 3,395 square feet, including four bedrooms and 4.5 bathrooms. Its living room, complemented by a loggia, offers stunning views of Central Park. This sale marks the fourth occasion this year that a unit in this 39-story, 122-unit building has topped this report. The building's amenities, which include a fitness center, indoor and outdoor pools, basketball and pickleball courts, and a dog-washing facility, add to its allure. The second highest contract was on the 6th floor of 944 Fifth Avenue, a co-op once owned by the late legendary TV journalist Barbara Walters, sold for $17.75 million. This unit features five bedrooms, 5.5 bathrooms, and impressive 10-foot ceilings, with key rooms facing Central Park.
50 West 66th Street Unit 43N
New York City Market Continues to Slow
The rental market in New York City is currently experiencing a notable adjustment. Manhattan’s median rent in October witnessed a 3.6% decrease to $4,195, marking the end of a period of rapid escalation in rental prices. This decrease signifies the lowest annual increase since September 2021 and contrasts sharply with the 20 to 30 percent increases observed through much of 2022. The rental market seems to have peaked in August, and the current trend suggests a leveling off at prices significantly higher than pre-pandemic levels. Observations from Douglas Elliman and Miller Samuel indicate no immediate prospect of significant rent reductions, despite the slowdown. The report also notes a shift in tenant behavior, with a preference for lease renewals over new lease signings. This is reflected in the drop in new lease signings in Manhattan, which fell for the fourth consecutive month. Brooklyn and Northwest Queens are mirroring this trend, with Brooklyn experiencing its first annual rent drop in two years and Queens seeing a more pronounced decline in median rents. These changes in the rental landscape reflect a broader national trend of slowing annual rent growth.
Source: Apartments.com
The New York City condo market, especially in the luxury sector, is experiencing a significant shift. For the second consecutive month, new condo sales have fallen below pre-pandemic levels, as reported by Marketproof. Despite high interest rates generally dampening the real estate market, luxury condos in Manhattan seem less affected due to a high proportion of cash buyers — 72 percent of new development condo sales last month were made in cash. However, the pace of sales suggests a shrinking inventory, particularly for condos priced between $1.5 million and $4 million, which are estimated to sell out in less than three years if no new supply is added. The luxury segment, involving properties priced above $8 million, shows a slower movement with 3.7 years of inventory. This trend is not just confined to Manhattan; Brooklyn too saw an uptick in contracts for homes over $1 million. The limited supply in these markets has contributed to an increase in unit prices. Moreover, changes in property tax incentives are predicted to shift developer focus from rental properties to more condo constructions, as evidenced by the surge in new condo filings in neighborhoods like Greenpoint.
Source: Marketproof
These developments in New York City’s real estate market — both in condo sales and rentals — highlight a period of transition influenced by broader economic factors, including federal monetary policies and shifting market dynamics. For investors, homeowners, and renters, these trends offer insights into the current state of the market and potential future trajectories. As the market continues to evolve, understanding these nuances becomes crucial for making informed real estate decisions in New York City.
Economic Outlook
The Federal Reserve has maintained its interest rates at a 22-year high, marking the second consecutive meeting without a change. This decision, signaling caution in the face of rising Treasury yields, suggests potential impacts on the economy and inflation. The Federal Open Market Committee has acknowledged tighter financial and credit conditions, which could weigh on economic activity and hiring. With the uncertainty of these effects, the Fed remains highly attentive to inflation risks. Fed Chair Jerome Powell noted the significant tightening of financial conditions in recent months, driven by higher, longer-term bond yields. He emphasized that the full impact of previous rate hikes on economic activity and inflation has yet to be fully felt. This cautionary approach by the Fed, especially considering potential further rate increases, has direct implications for the real estate market, particularly affecting borrowing costs and investment decisions.
Despite the Federal Reserve's conservative approach, the U.S. economy grew at a robust pace of 4.9% last quarter, fueled by consumer spending. This growth, the fastest since 2021, suggests a resilient economy despite high prices and rising borrowing costs. The enduring strength of the job market has been a significant driver of this resilience. However, the Federal Reserve officials are closely monitoring this economic momentum to determine future interest rate adjustments. The potential for slowing growth in the coming months, as borrowing costs limit big-ticket purchases, poses challenges for the real estate market, potentially affecting both residential investment and consumer purchasing power.
The current economic scenario, characterized by high interest rates and a growing economy, creates a complex backdrop for the real estate market. For instance, the Fed's decision to maintain high interest rates may influence mortgage rates, impacting buyer affordability and possibly cooling the housing market. Conversely, the strong economic growth and solid consumer spending could support the real estate market, particularly in high-demand areas. Investors and potential homebuyers in the real estate market should consider these broader economic conditions and the Fed's future monetary policy direction when making decisions. The intersection of the Federal Reserve's monetary policy and the U.S. economy's performance creates a nuanced environment for the real estate market. Understanding these dynamics is crucial for navigating the market effectively, whether for investment or personal property acquisition.
Source: FreddieMac
Pick of the week
For those of you who might not know, beyond the bustling world of real estate, I'm quite the NFL fan! As we dive deeper into the season, I thought, why not sprinkle a little fun into our newsletter? Every week, I'll share my "Pick of the Week" for sports betting. While my expertise is firmly in real estate, I think this will be an enjoyable twist for our readers. But remember, it's all in good fun and purely for entertainment – always wager responsibly!
Last week was a fantastic comeback for us! It was energizing to regain our stride with a solid 2-0 week, improving our yearly record to an impressive 6-2. This week, we're turning our attention to Los Angeles, where the Lions will face off against the Chargers. The Lions look to prove themselves as one of NFCs elite, offers great value nearly at even odds, against a Chargers team that has shown inconsistency. For this week my standout selection for the week is the Lions on the money line against the Chargers.
Lions -130 vs Chargers
Record 6-2
Contact Me Today
Feel free to reach out to discuss more in-depth about your real estate goals, share your thoughts about my newsletter, or to share what you're experiencing in this market. I look forward to hearing from you!
