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New York City Real Estate Rundown
End of August Update
Thomas Moran
September 19, 2023
Market Pulse
Manhattan's real estate market displayed a consistent performance with eighteen contracts signed at $4 million and above in the last two weeks. Condos maintained a leading edge, outselling co-ops 11-4, complemented by the sale of 3 townhouses. Impressively, this sales figure surpasses the 10-year post-Labor Day week average, with 16 contracts being the norm.
Top Sale
Highlighting the top sales, a luxury unit at 217 West 57th Street, aptly named the Central Park Tower, clinched the top spot. Originally priced at $38,448,000 in 2018, the unit went under contract with an asking price of $34,264,000. This architectural marvel boasts 4,251 sq.ft, adorned with 4 bedrooms, 4.5 bathrooms, and panoramic views of Central Park. The skyscraper itself, standing tall at 1,550-foot, offers an ensemble of amenities spread across 50,000 sq.ft, including pools, fitness centers, and a plush club room.
Market Report
Both Manhattan and Brooklyn real estate markets have seen a pronounced reduction in new inventory. This decline, seen most starkly in August with a 59% significant drop from 2019 new inventory numbers. This is consistent with a broader national trend. Jonathan Miller, CEO of Miller Samuel, links this dwindling supply directly to high interest rates. With attractive low mortgage rates locked in, many potential sellers are holding back, exacerbating the existing supply-demand imbalance.
In Manhattan, while there's been some movement with new contracts for co-ops and condos, an overall decrease in listings persists. Notably, condo contracts experienced a year-over-year reduction, and the availability of both condos and co-ops has been steadily decreasing for several months. Listings for one-to-three family buildings have also seen a decline.
In the larger picture, Manhattan's real estate market dynamics are clear indicators of the strain from supply constraints. Both the external influence of high interest rates and internal factors, like inventory shortages, are shaping the trajectory of NYC's real estate landscape.
Interest Rate Rundown
The CPI number for August came in higher than expected and is making the Fed more likely to raise rates yet again before the end of the year. When we hear that rates are rising we immediately go to the notion that things are becoming more expensive and less attainable. Will borrowing cost more? Yes. But that increase is not as harsh as you would think and is fractional compared to missing out on getting into the market or expanding your portfolio.
For every $100,000 you borrow on a mortgage, depending on your rate, the above chart lays out what you will pay. If you borrowed $500,000 at 7%, your mortgage payment would be ($665 x 5) $3,325 per month. If you borrowed the same money but at 5% your mortgage payment would be ($537 x 5) $2,685 per month. That's only a $640 difference a month and $7,680 a year. The asset you purchase will appreciate more in your first year than you would have saved in a lower rate by waiting.
In high rate environments, prices are lower. And when rates do drop, they will only drop by a quarter to a half point at a time. Saving $50,000-$70,000 off an asking price is more advantageous than saving $7,680 a year in a lower rate. You are better off buying in a higher rate environment with lower prices, than a lower rate environment with higher prices.
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!
Patriots -145 vs NYJ
Record 0-0
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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!
