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New York City Real Estate Rundown
September 27th Update
Thomas Moran
September 27, 2023
Market Pulse
Last week, Manhattan's luxury residential real estate market saw eight contracts signed for properties priced at $4 million and above. While this represents a slight decline compared to the previous week, it's interesting to note that this total of 8 contracts is the lowest since the week of August 15-21, 2022, when we also saw 8 contracts signed. Additionally, the total dollar volume of these contracts, amounting to $45,414,999, is the lowest since the height of the pandemic, during July 27-August 2, 2020, when 6 contracts were signed totaling $36,543,000 (Olshan Market Report).
Downtown Manhattan took the lead last week with an impressive 5 transactions, The Upper East Side followed with 2 transactions, while Midtown contributed 1 transaction to the mix. Notably, condos maintain their reign, outselling co-ops by an impressive margin of 6 to 1. While, one condop contract was also included in the mix.
Key Statistics for Last Week's Luxury Real Estate Contracts:
Total Weekly Asking Price Sales Volume: $45,414,999
Average Asking Price: $5,676,875
Median Asking Price: $5,982,500
Average Discount from Original Ask to Last Asking Price: 12%
Average Days on Market: 544
Source: UrbanDigs
Top Sale
The standout transaction of the week was the sale of Penthouse at 44 Lispenard Street, originally listed at $7.95 million in October 2022 but reduced to $7.5 million. This stunning condo triplex penthouse spans 3,196 square feet, offering three bedrooms and three and a half bathrooms. The property also boasts three terraces, totaling 1,200 square feet. Of note, the top floor features an office/den with a fireplace, leading to a terrace with an outdoor kitchen. It's important to mention that there are no amenities in the building. The seller initially purchased this penthouse for $7,050,000 in June 2018.
Expanding Housing Options for Low-Income New Yorkers
In a significant development for New York City's housing landscape, low-income residents who qualify for city housing subsidies are no longer limited to the five boroughs. This groundbreaking initiative, set to begin next week, allows eligible individuals and families to rent apartments in other parts of the state where rents are more affordable and housing is likely more abundant.The expansion of housing options for low-income residents with housing subsidies in New York City is likely to have several effects on the NYC rental market. This initiative offers alternatives to low-income individuals and families beyond the city's five boroughs, potentially leading to increased demand in surrounding areas and a possible relief on the demand for affordable rentals within the city. As a result, it may contribute to stabilizing or reducing rental prices in certain NYC neighborhoods and promote competitive pricing. Moreover, this program aims to address the diminishing number of affordable housing units in NYC and may lead to demographic shifts in some neighborhoods. However, the full impact on the rental market will require ongoing monitoring as tenant choices, market responses, and policy adjustments evolve over time.
Interest Rate Rundown
Source: Bloomberg
The Federal Reserve recently maintained its key policy rate, the federal funds rate, unchanged in September, keeping it in the range of 5.25% to 5.5%. However, it signaled the likelihood of another rate hike later this year. The Fed's primary focus remains on controlling inflation and ensuring it returns to a sustainable level. Based on the "dot plot," which summarizes projections of Fed members about the policy rate's future trajectory, the consensus suggests one more rate hike this year. Furthermore, the dot plot indicates a "higher-for-longer" interest rate environment, with projections for higher rates in 2024 and 2025.
The Summary of Economic Projections (SEP) shows expectations of slower GDP growth and inflation over the next year. While GDP projections for 2023 and 2024 have been revised higher, the committee anticipates growth slowing from 2.1% this year to 1.5% next year. Additionally, the unemployment rate projections have also been revised higher. Fed Chair Jerome Powell expressed concerns about reaching the 2% inflation target in the near term. He noted that policy remains "restrictive," with high real yields affecting consumer spending and business investment.
Source: Bloomberg
Mortgage rates, currently above seven percent, are showing resilience despite the Federal Reserve's pause on interest rate hikes. However, the impact of elevated rates is starting to be felt in the real estate market. Housing demand is waning, and homebuilders are facing challenges. Builder sentiment has declined for the first time in months, and construction activity is at a three-year low. This dip in construction levels could further strain the already limited housing supply.
It's important to note that changes in the federal funds rate controlled by the Fed may not have an immediate impact on mortgage rates. Mortgage rates are influenced by longer-term bond yields, such as the 10-year Treasury yield, which respond to various economic factors beyond just the federal funds rate. Consequently, it may take several weeks or months for adjustments in the federal funds rate to fully affect mortgage rates.
Source: FreedieMac
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 +7 vs Cowboys
Record 1-0
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!
