New York is set for a spring awakening. Contract activity jumped 14.5% quarter-over- quarter in Q1 as buyers and sellers increasingly decided to move on with their lives after largely waiting on the sidelines during the second half of 2022, accepting the reality of higher interest rates, sustained economic uncertainty, and ongoing geopolitical challenges.
2,262 apartments closed during the year's first quarter, totaling $4.49 billion. This transaction volume resembles the historical average more so than the frenzied buying that began in 2021. Moreover, most activity last year occurred during the first half of the year when interest rates were significantly lower than what they are today and on the heels of a hyperactive 2021. The market today is more sustainable and balanced.
Contract data show a greater acceptance of current conditions with signings accelerating in February and holding steady since, pointing to a rosier spring ahead. Even the submarkets with the steepest declines, like the Financial District and Midtown West, are primed to show better in the spring, as the seasonality of sales impacts them more significantly.
The persistent challenge in New York City, as in the rest of the country, is an inventory shortage.
Still, homes that are accurately priced and turnkey are trading, as life circumstances do not pause for more favorable market conditions. All signs indicate a continued market evolution, with consumers more willing to transact. While external factors may remain unsettling, Manhattan real estate remains a valued asset class. Working with a knowledgeable agent and the industry's leading technology platform makes navigating the changing tide much smoother.
Mortgage Rates Mortgage applications to purchase a home rose 8% last week, compared with the previous week, as rates hit a two month low. They were, however, 31% lower than the same week one year ago, when interest rates were significantly lower. The Mortgage Bankers Association expects average mortgage rates to fall to 6.1% in the 2nd quarter of 2023 and to 5.3% by year's end.
Luxury Market Twenty two contracts were signed last week in Manhattan at $4million and above, 12 fewer than the previous week. Condos outsold coops 15-5, and 2 townhouses were in the mix. The lull in the action is typical of the Easter holiday week, where the 10 year average of contracts that week is 23. Anecdotally speaking, the luxury market is extremely strong. We have seen a strong presence of international buyers with the dollar depreciating ~13% of its value in comparison with the Euro and Pound since September.
Rental Market Manhattan's median rent reached a new high as new lease signings were the second-highest March on record. Listing inventory expanded annually for the fifth consecutive month. Non-doorman price trend indicators representing the lower half of the market continued to see higher annual gains than doorman price trend indicators. New development lease signings rose at triple the annual rate of existing rental lease signings. Luxury median rent rose annually for the twenty-first month as more than half of all luxury tenants signed two-year leases for the third straight month.
Some Notable Compass News
- Luxury Sales - For the second year in a row, Compass is the luxury leader in transactions. In 2022, Compass was involved in 41% of transactions over $10M+.
- Coop Sales - Compass was the number one brokerage for co-op sales in NYC in 2022 with 2,490 sales representing $2.8B in volume.
- Web Traffic - Compass continues to be #1 in web traffic with over 22 million website visitors, which is many millions more than any other firm.
