Happy New Year!
2023 was a tough market. Interest rates soared, financial markets wavered, and surprisingly, people still really wanted to buy homes. But there weren't enough quality homes to go around, so in certain pockets prices held or went up even though home purchases became less affordable.
First time homebuyers and buyers with financing, were mostly sidelined by high rates and limited options, while sellers hunkered down thanks to their low-rate mortgages. Cash buyers were the majority of home purchases and the motivation to move was reduced by the mortgage lock-in effect.
Now, interest rates are dropping and the economy's looking brighter. This might unleash a wave of new buyers in 2024. The big question is: how low do rates need to go to get more sellers into the game and bring the market back to balance? Regardless, dramatically improving economic indicators suggest a brighter 2024 housing market.
What We’re Seeing In The Market There’s a narrative that people are fleeing New York City. Although people are buying residences outside the state of New York, we’re not seeing many of them let go of their residence in NY. We are seeing a big gravitation towards pied-e-terres.
Sellers who are not getting their prices are pulling their homes off the market, apartments in need of renovations (or any work for that matter) and starter homes are having the most difficulty trading today and the gap between renting vs. buying is at an all time high, but has been narrowing in recent weeks with drops in interest rates (we expect this to continue).
Manhattan Luxury Market 2023 Year In Review ($4M+ Properties):
- Sales down: 8% decline in contracts signed compared to 2022.
- Volume down: $9.98 billion total sales volume compared to $10.32 billion in 2022.
- Condos rule: 770 condos sold vs. 269 co-ops, with 27 condops and 132 townhouses.
- Negotiability up: 9% average price reduction from original asking price to final sale price.
- Days on market longer: 615 days on average, partly due to expensive new-development backlog. Deals just took longer to get to the finish line.
- Highs and lows: High mortgage rates countered by strong stock market performance vs. last year being the opposite (S&P down 18% and interest rates in the 3s)
- Trophy market booming: 240 deals at $10 million+, ranking 3rd in the past decade.
- Overall average performance: 2023 Ranked 5th in the past decade, outperforming 2016-2020 despite challenges.
Takeaway: The Manhattan luxury market remained resilient in 2023 despite economic and geopolitical hurdles. While sales and volume dipped slightly, demand remains strong, particularly for high-end properties.
NYC Rental Market 2023 Summary:
- Rents rising (but slowing down): Median asking rents up 9.3% YoY (vs. 28% in 2022).
- More rentals available: Listings increased 8.8% after a steep drop in 2022.
- Inventory still below pre-pandemic: Current level 16.2% lower than 2019.
- Significant gap to fill: City needs 40,000+ new rentals in 2024 to reach pre-pandemic levels.
- New construction unlikely to fill the gap: Only 9,909 new units proposed in 2023.
Takeaway: Rents continue to rise, but at a slower pace. Supply is increasing, but remains significantly below pre-pandemic levels. Landlords may see continued strong demand and tenant competition, especially with limited new construction coming online.
We thank you for your continued support and look forward to what 2024 has in store!
