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New York City Real Estate Rundown
October 19th Update
Thomas Moran
October 19, 2023
Market Pulse
The high-end real estate market experienced a decline last week, with only 16 contracts signed for properties in Manhattan priced at $4 million or more. This marked a drop of 10 contracts compared to the previous week. Notably, condos outperformed co-op apartments, with a ratio of 10 condo contracts to 5 co-op contracts, and one townhouse was included in the mix. Downtown and Upper East side saw the most action each notching 6 transactions last week.
Key Statistics for Last Week's Luxury Real Estate Contracts:
Total Weekly Asking Price Sales Volume: $145,463,750
Average Asking Price: $9,091,484
Median Asking Price: $5,995,000
Average Discount from Original Ask to Last Asking Price: 6%
Average Days on Market: 530
Top Sale
500 West 18th Street - 28AD
The top contract of the week was a unit at West 28AD, located at 500 West 18th Street, with an asking price of $22,120,000. This contract involves the combination of two units, resulting in a spacious residence spanning 5,355 square feet. The property offers picturesque views of the Hudson River and boasts six bedrooms, six bathrooms, and two powder rooms. It's worth mentioning that the buyer of this combined unit had previously missed out on another unit within the same building. Notably, this building, originally named "The XI" and launched in 2018, underwent significant changes, including a foreclosure exceeding $1 billion. In 2021, a new sponsor, Witko!, took over the construction and rebranded the building as "One Highline," offering a comprehensive amenity package, including a fitness center, a 75-foot lap pool, spa treatment rooms, a golf simulator, a children's playroom, private dining, a games lounge, and a garage. Additionally, services are provided in collaboration with the adjacent Faena Hotel as part of the rebranded project.
New York City Rental prices begin to slow
New York City's landlords are bidding farewell to the era of record rent growth, as signs of a slowdown become increasingly apparent. After nearly two years of soaring rental prices, the median rent in Manhattan took a hit in September, sliding to $4,350 with a month-over-month decrease of 1.15 percent, as reported by appraisal firm Miller Samuel for Douglas Elliman.
Source: StreetEasy
This decline in rent prices is not an isolated event and is accompanied by a decrease in new lease signings and a rising vacancy rate. Many believe this suggests that the days of rapid rent increases are now behind us. Tenants, in particular those residing in non-doorman buildings with generally more affordable rents, have opted to renew their existing leases rather than seek new rentals. This trend has been driven by a desire to maintain more stable housing, which is notably different from the pre-pandemic era.
Source: UrbanDigs
We are witnessing the early stages of a shift in the rental market – one that hints at increased affordability or, at the very least, a reduction in rapid price surges. Rising rental costs and increasing inflation are expected to moderate renter demand, leading to a gradual stabilization in prices. The stabilization of rental prices will be a slow process, primarily due to the limited availability of rental units. Additionally buyers who have been priced out of the housing market due to high rates may continue to stay in the rental market until the spring 2024 season, which will keep relatively high rental rates. With that being said; the vacancy rate in Manhattan has surpassed three percent for the first time in over three years.
Brooklyn and Queens are following suit with declining demand and rising inventory, and rental prices in these boroughs have retreated from the record highs witnessed this summer. The question now is whether these price adjustments will persist throughout the winter or stabilize. Seasonal patterns, disrupted by the pandemic, may lead to decreased demand for apartments until spring, possibly putting downward pressure on rents.
Inflation and Interest Rate Outlook
Recent reports have shown that economists are becoming increasingly optimistic about the U.S. economy. The probability of a recession within the next year has lowered from 54% in July to 48%, marking the first time it has dropped below 50% in over a year. Factors contributing to this positive outlook include a decline in inflation, the Federal Reserve's decision to halt interest rate hikes, and a robust labor market.
Source: Wall Street Journal
Economists are revising their growth forecasts upward. Gross Domestic Product (GDP) is expected to increase by 2.2% in the fourth quarter of 2023, a significant improvement from the 1% growth forecasted in the previous survey. While forecasts for next year have been adjusted slightly downward, growth is still expected in 2024 and 2025, with the unemployment rate staying close to historically low levels.
The real estate market has continued to display resilience amid these changes. As the economy stabilizes, we anticipate steady growth in property values. However, the first half of 2024 might see a slight slowdown in job creation and economic growth, which could impact the real estate market. In this period, it's essential to remain informed and adapt your real estate strategies accordingly.
The Federal Reserve has signaled its intention to maintain current interest rates in the near term. While approximately 60% of economists believe that the Fed has completed its cycle of interest rate increases, there is a 23% expectation of one more hike. Inflation, as measured by the consumer-price index, is expected to decrease to 2.4% by the end of next year.
The stabilization of the economy, coupled with lower interest rates, presents an excellent opportunity for prospective buyers to enter the market. Additionally, the rental market is experiencing changes as affordability thresholds are being reached, particularly for lower-income tenants. Manhattan's median rent has shown a slight decline, suggesting that the era of rapid rent growth is potentially waning.
In this evolving economic landscape, real estate remains a stable and promising investment. Properties in prime locations, such as Manhattan, continue to hold their value and offer long-term growth potential. If you've been considering real estate investments, this could be an opportune time to explore options.
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!
Ravens -3 vs Lions
Record 3-1
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!
