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New York City Real Estate Rundown
NAR Settles $418 Million Lawsuit, FED Keeps Rates Higher For Longer
Thomas Moran
March 21, 2024
Market Pulse
In this week's recap, Manhattan's luxury real estate market has demonstrated remarkable vigor, with forty contracts signed at $4 million and above. This surge in activity showcases a preference for condos, which led the sales with thirty contracts, far outpacing co-ops at seven, and with three townhouses also making their mark. Notably, this marks the first instance in 2024 where the luxury segment has seen 30 or more contracts in a week, a feat achieved thirteen times in 2023. Last week not only matched the peak activity of May 8-14, 2023, with forty contracts but also revealed a trend towards the more accessible end of the luxury market, as over half of the properties sold for below $5,500,000. This bustling week brings the total weekly asking price sales volume to $290,279,450, with an average asking price of $7,256,986 and a median of $5,487,225, despite a lingering average market time of 726 days and an average discount of 11% from original to last asking prices, underscoring both the opportunities and the competitive nature of Manhattan's luxury landscape.
Key Statistics for Last Week's Luxury Real Estate Contracts:
Total Weekly Asking Price Sales Volume: $290,279,450
Average Asking Price: $7,256,986
Median Asking Price: $5,487,225
Average Discount from Original Ask to Last Asking Price: 11%
Olshan Reality Report
Top Sale
41NS 50 West 66th Street
This week's top sale is a testament to the pinnacle of luxury living in Manhattan. The crown jewel, Unit 41NS at 50 West 66th Street, entered the market with a staggering asking price of $46,750,000. This magnificent condo, a seamless amalgamation of two units, sprawls across an impressive 6,942 square feet, featuring five bedrooms and 5.5 bathrooms, each space finished to the highest standards of luxury and design. The interior is graced with soaring 14-foot ceilings, enhancing the sense of grandeur and spaciousness, while offering uninterrupted views of Central Park, a feature few can claim.
The heart of this exquisite residence is the 56-foot great room, an architectural marvel with its expansive windows that frame Central Park as if it were a living artwork, further accentuated by two loggias providing serene outdoor spaces to soak in the vistas. The Extell Development's commitment to unparalleled luxury is evident in the building's amenities: round-the-clock doormen ensure privacy and security, while the fitness center, indoor lap pool, and outdoor saltwater pool with jacuzzi cater to wellness and relaxation. Sports enthusiasts will appreciate the inclusion of basketball and pickleball courts, and the screening room, game room, bike room, and dog-washing facility add layers of convenience and leisure to the residents' lifestyles.
National Realators Association to Settle $418 Lawsuit
Yahoo Finance
In a landmark decision that's set to reshape the landscape of real estate brokerage in the United States, the National Association of Realtors (NAR) has agreed to a significant settlement of $418 million to resolve legal claims alleging that the real estate industry conspired to keep commissions artificially high. This settlement, pending court approval, not only resolves these claims but also mandates the repeal of the commission-sharing policy that was central to the litigation.
For decades, the model that has dictated how real estate agents are compensated for their services has relied on a commission-sharing structure. Under this model, listing agents would offer a portion of their commission to the buyer's agent, a practice facilitated and standardized through Realtor-controlled multiple listing services (MLS). This system, while providing simplicity and consistency, has faced criticism for lacking transparency and potentially keeping commission rates higher than they might otherwise be in a more openly competitive market.
Moving forward, the settlement will likely usher in a new era for brokerage commissions. The repeal of the commission-sharing policy signifies a significant shift towards more transparent and potentially negotiable commission structures. Agents may need to adapt to new business models, such as flat-fee services or hourly rates, which could provide consumers with more options and potentially lower costs when buying or selling a home. Additionally, the settlement opens the door for sellers to negotiate commission rates more effectively, without the fear that lower offers will deter buyer's agents from showing their homes.
This seismic shift is not without its challenges. The real estate community is now tasked with navigating these changes, with some agents considering alternative career paths or business models in response to the new landscape. Furthermore, the settlement could influence buyer behavior, with some potentially opting to cover their agent's commission upfront to secure representation in their home purchase.
As the industry adjusts to these changes, the impact on the traditional real estate transaction process remains to be seen. What is clear, however, is that this settlement marks a pivotal moment for the real estate industry, with significant implications for how homes are bought and sold in America. Agents, buyers, and sellers alike will need to stay informed and adaptable as the full effects of these changes unfold.
FED Continues to Affect Buying Behavior
CNBC
Amid a landscape where rising mortgage rates and a cautious Federal Reserve have prompted many high earners to favor renting over purchasing, the Manhattan real estate market continues to defy broader trends with its remarkable resilience and growth potential. As reported by the Wall Street Journal, mortgage rates have escalated, reaching an average of around 6.88%, with peaks as high as 7.79% last fall, influencing purchasing decisions across the board. Yet, in this challenging economic environment, the Manhattan market has remained robust, attracting strategic investors who see beyond the immediate horizon.
The Federal Reserve's latest projections, signaling three quarter-point rate cuts within the year yet adopting a cautious stance on inflation, hint at a scenario where interest rates might remain elevated longer than anticipated. This has introduced a degree of uncertainty in the real estate market, with potential buyers weighing the cost implications of borrowing. However, Jerome Powell's recent expressions of hesitancy regarding swift rate cuts underscore a deliberate, slow-moving approach to monetary policy adjustments, further complicating the buying versus renting dilemma for many.
Bloomberg
In contrast to the prevailing cautious sentiment, the Manhattan real estate sector has seen a surge in activity, evidenced by the 40 contracts that went under contract last week alone, marking the most significant activity since spring 2023. This uptick underscores the unique position of Manhattan real estate as a sought-after commodity, with investors keen to capitalize on what they perceive as an opportune moment to secure valuable assets at more favorable prices.
This keen interest from strategic investors, including prominent firms like Blackstone, in acquiring Manhattan properties even amidst rising mortgage rates and economic uncertainties, reflects a profound understanding of the market's historical performance and its potential for long-term value appreciation. The consistent outpacing of inflation and substantial returns offered by Manhattan real estate investments make a compelling case for those looking to invest, highlighting the significant opportunity costs of delaying property purchases in such a vibrant market.
Savvy investors' decision to proceed with acquisitions, undeterred by the potential for future rate cuts or the current high cost of borrowing, is indicative of a broader strategy that prioritizes long-term gains over short-term economic fluctuations. Their actions demonstrate a calculated approach to real estate investment, with a clear focus on the enduring appeal and growth potential of Manhattan properties.
While the broader narrative might lean towards a shift to renting in response to financial and monetary policy challenges, the Manhattan real estate market continues to chart its own course. The activity and confidence observed among strategic investors reveal a market that remains dynamic and attractive, driven by a long-term perspective that looks beyond immediate economic indicators and interest rate concerns to the intrinsic value and enduring potential of Manhattan real estate.
Pick Of The Week
For those of you who might not know, beyond the bustling world of real estate, I'm quite the sports 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!
Jumping into March Madness, I’m dropping my bracket. UConn’s obviously the best team, but where’s the fun in picking the top dog? I’m all in on Arizona Wildcats – yeah, they're a bit hit or miss, but I’m betting they find their groove when it really counts. This year, teams like Kentucky, Drake or McNeese potentially heating up and making a deep run scare me a lot, but I’m skeptical about teams that are all offense. As for the Midwest, honestly, not sold on any of these teams. I hate Purdue, and even though Gonzaga might stumble right out of the gate, I’m backing them to get to the elite 8 – mostly just to spite Purdue.
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