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New York City Real Estate Rundown
October 10th Update
Thomas Moran
October 10, 2023
Market Pulse
In this week's issue, I discuss a captivating glimpse of the recent real estate surge, explore the potential impact of a government shutdown on interest rates, and delve into the exciting shift towards a buyers' market in New York City.
Last week in Manhattan, we witnessed a remarkable surge in real estate activity, with a total of twenty contracts signed for properties priced at $4 million and above. This notable uptick signifies a substantial increase, surpassing the previous 12-month low by a remarkable margin. To break it down further, these contracts were distributed across different neighborhoods, with Downtown claiming 11, the Upper West Side securing 5 contracts, and the Upper East Side notching 4. Condos emerged as the preferred choice among buyers, significantly outnumbering co-op purchases by a margin of 16 to 2. Additionally, there was one condop and one townhouse included in this diverse mix of high-value properties.
Source: Olshan Realty
Market Statistics for September 25 - October 1, 2023
Total Weekly Asking Price Sales Volume: $160,750,000
Average Asking Price: $8,037,500
Median Asking Price: $6,555,000
Average Discount from Original Ask to Last Asking Price: 8%
Average Days on Market: 707
Top Sale
Notable among these transactions was the sale of PH10 at 760 Madison Avenue, listed at $25 million. This luxurious condo in the Giorgio Armani Residences offers 3,108 square feet of space, including 3 bedrooms, 3.5 bathrooms, and a remarkable wraparound terrace spanning 1,279 square feet. The condo, designed by CookFox, boasts a doorman, fitness center, and resident's lounge. The launch 760 Madison Avenue was discreetly marketed over the summer and is already half sold, with closings scheduled for next summer.
New York City Enters a Buyers Market
After a long period of sellers having the upper hand, it seems the tides have turned in favor of potential homebuyers. Higher interest rates have played a significant role in this shift, but before you panic about rising borrowing costs, consider the incredible opportunities this change brings.
A recent report from UrbanDigs reveals that September marked the best month for buyers since the pandemic lockdowns hit the market in 2020. The primary reason behind this shift is the drop in market liquidity, as measured by the number of contracts signed over a rolling 30-day period, which has reached its lowest point in three years. The ratio of sales to properties leaving the market without a sale, is now favoring buyers indicating that sellers no longer hold all the cards.
Source: UrbanDigs
With the number of active listings slightly higher than seasonal norms, it suggests that the lack of deals is due to a lack of buyers. This situation is a dream come true for those on the hunt for their dream Manhattan property. As UrbanDigs co-founder John Walkup aptly puts it, "If you're a buyer, you really have been waiting for this for a couple of years. You've got a decent amount of choice and you've got the market to yourself."
While the reasons behind the slowdown in buying activity in September may include holiday weekends and rainy weather, it's essential to recognize the broader economic context. Mortgage rates have been on the rise and have reached levels not seen since 2001, as reported by Freddie Mac. This increase in borrowing costs has sparked concerns about affordability.
However, here's the critical perspective to consider: for every $100,000 borrowed on a mortgage, the difference in monthly payments between a 7% interest rate and a 5% interest rate is only $640 per month. While higher rates may seem daunting, this increase pales in comparison to the potential savings you could enjoy by purchasing in a market with lower prices.
In a high-rate environment, property prices often drop, offering a unique opportunity to secure real estate at a lower cost. When interest rates eventually decrease, they tend to do so incrementally. Saving tens of thousands of dollars on a property's asking price is far more advantageous in the long run than saving a few thousand dollars per year on a lower interest rate.
In essence, the current buyer's market in Manhattan is a golden opportunity for savvy investors. Higher rates might increase borrowing costs, but the potential for significant savings on property prices more than compensates for this. So, if you've been contemplating entering the Manhattan real estate market, now may be the ideal time to make your move.
Source: FreddieMac
The Government Shutdown's Real Estate and Interest Rate Roulette
Source: Statista
Let's delve into a topic that adds a dash of uncertainty to our real estate adventure: the potential government shutdown. Such an event could send ripples through both the real estate market and interest rates, and here's where it gets intriguing.
A government shutdown could disrupt the Federal Reserve's monetary policy decisions, potentially affecting interest rates. The real estate market, sensitive to interest rate changes, may experience uncertainty and fluctuations during such a period. As prospective real estate buyers and investors, it's essential to closely monitor developments in both the government shutdown and interest rate scenarios to make informed decisions in this evolving economic landscape.
You might assume that a government shutdown has a primarily negative impact on the economy, making a rate hike seem counterproductive.While that may be true, real plot twist here is about access to critical inflation data. When a shutdown occurs, agencies like the Departments of Labor and Commerce, responsible for producing crucial reports on price trends, effectively go on an involuntary vacation. The Federal Reserve would essentially be blindfolded at its November meeting. The Federal Reserve relies heavily on reports from the Departments of Labor and Commerce, particularly the personal consumption expenditures price index and the consumer price index, to gauge inflation. These reports are crucial to properly measure inflation.
While Bank of America's U.S. economist, Aditya Bhave, believes a prolonged shutdown is unlikely, if it does stretch beyond a month, the Fed might wisely choose to hit the pause button in November, not raising rates for the time being. As for December, it's still up in the air, potentially taking the key borrowing rate to a target range of 5.5%-5.75%. However, this forecast hinges on the duration of the government shutdown and the trajectory of inflation.
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!
Colts +110 vs. Titans
Bonus: Over 39.5 Cowboys vs. 49ers
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!
