As the spring season gains momentum, signed contract activity remains strong, with generational wealth transfers playing a key role. However, financial market uncertainties—driven by government turbulence, layoffs, tariffs, and trade concerns—are tempering overall consumer sentiment.
Despite this, wealthy buyers continue to spend and save, buoyed by resilient investments. Meanwhile, mortgage rates have less impact on the luxury market but continue to influence broader housing trends. The return-to-office push is fueling demand in New York City as many workers aim to shorten commutes.
Ultra-Luxury Properties Lead the Pack: 32 contracts were signed last week in Manhattan at $4 million and above, 15 more than the previous week. Only 2 contracts out of the 32 were above $10 million, which is rare to have so many contracts signed with so few trophy properties in the mix.
Townhouses led a bounce back week for Brooklyn’s luxury market. In total, 15 townhouses in the borough inked contracts asking at least $2 million, including the top two most expensive contracts. 25 total contracts above $2 million were signed.
Rents Look to Go Higher: The Wall Street Journal predicts that “We’re Headed Toward a Landlord-Friendly Era” and to “Expect Higher Rent Prices.” More people now are renting longer, as mortgage rates stay high and the costs of homeownership remain unaffordable for many Americans. Landlords say that the new construction pipeline should be mostly drained by year-end, setting the stage for rents to rise nationwide later this year.
Rent To Own: Rent-to-own deals, traditionally used by buyers struggling to save for a down payment, are now gaining traction among wealthy homebuyers. With high borrowing costs, many are opting to rent-to-own as a way to secure a property at today’s price while waiting for better financing options. We are personally seeing this on multiple transactions.
Developers are also leveraging rent-to-own as a strategy to fill vacant units and generate income in slow-selling markets. Additionally, for buyers of newly built homes, these deals offer a chance to identify construction defects before committing to a purchase.
With rising interest, rent-to-own is becoming more than just a last-resort option—it’s now a strategic financial move for high-end buyers.
Energy Legislation’s Impact on Construction: In Q4 2024 there were 366 new building filings, reflecting a 12% increase from Q3 2024 when there were 326 filings, but a 58% decrease year-over-year. The spike in Q4 2023 was due to 501 of the 879 permits being for one- to three-family homes in Staten Island, likely driven by compliance with Local Law 154 of 2021, which prohibits the use of fossil fuels for heating and hot water in new one- and two-family homes by January 1, 2024.
Compass 3-Phased Marketing Strategy Impact: We are encouraging all of our sellers to list privately before going on the open market.
Compass’ internal analyses found that, in 2024, listings that were pre-marketed as a Compass Private Exclusive and/or a Compass Coming Soon before going active on the MLS:
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Were associated with an average of 2.9% higher close price (or on average $29,000, assuming a $1 million sale price) compared to Compass-sold properties that were not-premarketed.
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Received an accepted offer 20% or 8 days faster on average once active on the MLS than Compass-sold properties that were not pre-marketed.
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Created value for homeowners as ~30% fewer listings on average had a price drop once active on the MLS, compared to Compass-sold properties that were not pre-marketed.
Roughly 50% of our sales over the last six months have been sold privately.
As always, please reach out with any questions.
