There are positive signs emerging in Manhattan's real estate market. Buyer activity is on the rise, evidenced by a 9.3% increase in pending sales (agreements to buy) in the first quarter (Q1) compared to last quarter. This increase can likely be attributed: seasonality, growing acceptance of higher mortgage rates, and frustration with the lack of desirable rental options, leading some renters to opt for buying.
The luxury market is particularly hot, with contracts signed for ultra-luxury apartments (above $20 million) surging by 140% in Q1. There's also increased interest in larger apartments, with pending sales for units with three bedrooms rising 10.4% and those with four or more bedrooms jumping 19.2% year-over-year.
Interestingly, even though pending sales indicate rising buyer interest, closed sales (completed purchases) might have seen a slight price dip. This could signal that Manhattan's real estate market bottomed out in the last quarter (Q4) of 2023 and is now starting to see price stabilization, or possibly even future price increases.
Overall, the data suggests a potential rebound in Manhattan's real estate market, driven by increased buyer activity and a shift in buyer preferences.
Many variables could alter the forecast of what will happen the rest of the year, including sentiment around the Presidential election and substantial shifts to mortgage rates. But if one thing holds, regardless of circumstances, Manhattan will continue to be a destination for all, inspiring people from all walks of life to call the city home.
Q1 Update: Manhattan's real estate market in Q1 2024 saw a rise in cash deals and increased inventory, but closed sales dipped slightly. Here's a breakdown:
- Cash is King: Cash purchases accounted for a whopping 63% of closed deals in Q1, the third highest on record in the past decade. This suggests a market favoring buyers with cash readily available, with mortgage-backed transactions dropping nearly 27% year-over-year.
- Pending Sales Up, Closed Sales Down: While agreements to buy (pending sales) jumped, actual completed purchases (closed sales) fell 5.2% compared to last year and 13.7% compared to the previous quarter. This might be due to contracts signed during a period of lower prices finally closing.
- Prices Reflecting Market Shift: The average sales price dropped to $1.88 million, down from highs above $2 million in 2022. This price sensitivity is likely driven by a surge in co-op sales (59.3% of total sales), which are significantly cheaper (51.2% less) than condos.
- Inventory on the Rise: Good news for buyers! Inventory levels climbed to pre-pandemic levels, reaching 6,000 active listings in Q1, similar to what we saw in early 2019. There was also a significant increase in new listings compared to the previous quarter (27.5%). This rise in inventory during the spring buying season suggests a potential return to a more balanced market.
Luxury Market: 26 contracts were signed last week in Manhattan at $4 million and above, four fewer than the previous week. Condos outsold co-ops, 17-3, with 2 condops and 4 townhouses in the mix. Sponsor sales dominated the week with half of the contracts signed in new developments.
Townhouse Trends: Manhattan's townhouse market shows a mixed bag of trends in Q1 2024:
- Strong Contract Activity: There's good news for sellers - townhouse contracts surged by 25% year-over-year and a healthy 20% compared to the last quarter. This suggests potential for a busy year in townhouses.
- Fewer Available Townhouses: Despite the jump in contracts, the number of available townhouses continues to decline, remaining consistent with the past year and a half. This low inventory could fuel competition among buyers.
- Slower Closed Sales: Unlike contracts, actual closed sales (completed purchases) saw a slight slowdown compared to last year. This might be due to seasonal trends or contracts signed during a different market period.
- Price Increases, Especially for Turnkey: The average price for townhouses with signed contracts went up significantly. This is likely driven by a surge in high-value deals, particularly in trendy areas like the Upper East Side and Downtown.
- Price Decreases, Especially for Unrenovated: Interestingly, we are also seeing un-renovated townhouses, particularly on the Upper East Side and Midtown East, listed in the $3 million range for the first time in a long time.
Rentals - In Manhattan, the average asking rental price increased 3% to $5,345 in March. For Brooklyn, we saw a 5% growth month over month. Our team is seeing rentals moving quicker and concessions disappear as we enter the peak rental season. In the last week we have seen multiple apartments we’ve listed receive multiple applications. It seems the summer season, which typically starts in May, has arrived early.
Compass - #1 in The United States: Last month we shared that Compass was the #1 Brokerage in Manhattan and Brooklyn. This month we’re pleased to officially share that Compass was ranked the #1 brokerage for sales volume across the entire United States by sale volume for the third year in a row.
Please do not hesitate to reach out for your Manhattan and real estate needs in other markets. Almost anywhere a buyer is considering moving, Compass has a highly talented, high integrity, well-respected and hardworking agent to refer you to.
We thank you for your continued support!
