As we transition into the second half of 2023, a seasonal summer slowdown is upon us. The definite lull is dramatically different from the robust activity of the post pandemic summers of 2021 and 2022. Today’s sellers are frustrated by fewer showings, silent open houses, and no offers, not even low, embarrassing bids.
In New York, we’re back to pre-pandemic levels, having regained the acknowledged 8-12% drop in property pricing from 3 years ago. This year, we’ve managed to avert disasters, but it was a helluva roller coaster ride!
ChatGPT, or Generative Pre-trained Transformer . . . is a powerful tool which pushes the boundaries of what AI can do and makes advanced AI technologies accessible to different audiences and industries. . . . The new technology is stunning, stupendous and slightly scary.
It would be good if we could come together as an industry to make some changes to this process without having to legislate, blending the talents of experienced residential brokers and transactional attorneys along with the bet practices of managing agents and councels who represent co-ops. What say you?
Highlights Prevailing Trends
If you have questions about your own property or local neighborhood, don't hesitate to reach out.
Here's my recap:
For much of 2022, inventory was at restricted levels, slowing dramatically with each successive Fed rate hike beginning in April as property owners held onto their low-rate “golden handcuffs” mortgages.
Deal volume dropped significantly from the highs of 2021, and we’re back at 2019 pre-pandemic levels for pending sales—which were not so great if you recall.
With inventory and pending sales both down, one would have expected a drop in prices, but sales prices for the most part remained stable last year.
The only price bracket to see growth in 2022 was the uber luxury segment of properties priced $10-$20M which jumped 21.9% YOY in total sales.
Average days on the market for 4Q was 147; however, more than 25% of properties took more than 180 days to go to contract.
Approximately 50% of Manhattan purchases were all cash; those in a position to pay all had an obvious advantage as the cost of borrowing escalated.
The 2nd half of 2022 was all about rebalancing.
In 2023, the market will continue to recalibrate. If mortgage rates go down, as many speculate, demand will go up, along with prices and inventory. The first half of this year may just be the very best time to be a buyer.
Reach out if you need help selling or buying real estate in New York City or anywhere across the country. We have a national network of top real estate partners.
Goodbye 2022. We are ready for 2023! We’ve lived through considerable challenges these last three years with inflation in the forefront running at a 40-year high, and Covid hangovers splicing into a variety of flu and mystery viruses.
In uncertain times, when world events and macro outlooks are dire, there’s no better urban center to invest in than New York City. Our residential market is leveling to be sure, but we’re holding our own. In fact, there’s opportunity, and smart home shoppers are buying.
What are we seeing?
In January, following a record setting 2021 post Covid recovery, I wrote that Manhattan real estate was poised for a strong 2022. Sales volume last year totaled $30B—6% greater than the previous record set in 2007. During the first half of this year, sales volume reached $15.6B, the highest half year mark in a decade.
In the last 30 days in the residential resale market, there’s been a steady rise in the number of price reductions. Listing supply has increased slightly, but that may ebb as we move further into the summer months. Contract activity has been relatively steady, despite the spreading uncertainty and unease created by a confluence of unmitigated factors, namely rising interest rates (up .75% yesterday with more hikes to come), the ongoing war in the Ukraine, out of control inflation and stock market volatility.
Are anxiety and uncertainty creeping into our marketplace this quarter with the current macroeconomic and geopolitical concerns?
The burst of new listings we were expecting to begin mid-January never materialized. As a matter of fact, the continuing low supply of properties is pretty significant. Here’s what we are seeing.
The Manhattan residential real estate market continued its upward trajectory at record levels in Q4.
Who would have thought that two years after Covid-19 emerged, the global pandemic would still be front and center in our lives? Along with virus mutations, uncertainty has returned as our status quo. Holiday parties have been scratched to minimize exposures; block-long lines surround test centers; a reopened Broadway is balancing frequent cancellations as actors or crew test positive; travelers fly double-masked.
Sometimes you need a velvet rope to foster demand and create buzz and exclusivity. Remember the red velvet barrier in front of Studio 54 in the late 70’s? How cool was it when the big burly bouncer out front nodded that you could enter and join the other disco party-goers? When applied to real estate sales, velvet rope marketing is about creating demand by limiting availability to achieve a premium price.
● As expected, after Labor Day and the Jewish holidays, a wave of new inventory appeared to the significant tune of 2,088 total new offerings across all product categories and price segments. Surprisingly however, supply dipped in the weeks following, and resale stock has become short again, frustrating buyers who were looking for more options and prompting multiple offers. New listings were down nearly 30% YOY in Q3, forcing buyers to act quickly and helping to drive sales.
With Labor Day and Rosh Hashanah coinciding on this year's calendar, it’s no surprise that the number of new offerings dropped last week, making 8 consecutive weeks of shrinking new inventory. What’s eye-popping is that 27 contracts over $4M were signed last week, with condos outselling co-ops by nearly 4:1. Even more surprising, the previous week from August 23-29 saw 23 luxury contracts inked with 5:1 condos to co-ops and 9 townhouses, the largest number of TH contracts since Donna Olshan began tracking this $4M+ market segment in 2006 and the strongest pre-Labor Day week since 2014. It was the sixth month in a row for record high contract activity.
August vacations may account for some of the market declines in inventory and contracts this month. With supply super scarce in outlying suburban markets, is it possible that Manhattan will mirror the shortages seen in Westchester, Connecticut and Long Island? As housing stock drifts lower each week this summer, the pressure is on for buyers who are competing for fewer properties.
Stats from the second quarter reaffirm Manhattan real estate’s amazing rebound. Following on the heels of a stellar Q1, surging pent-up demand and low interest rates continued to work in tandem to drive up the number of contracts signed. At this point, we have regained values that were lost to Covid discounts and, by and large, we are back to pre-pandemic pricing. It’s activity however, not pricing, that’s way up.
The resilience of the Manhattan residential real estate market was on full display in the first quarter. A new year, new administration, low interest rates, and multiple and more readily available vaccines restored hope. Covid changed the way buyers look for and value space. With pent-up demand, today’s purchasers seek units with outdoor space and private areas for home offices, working out and gathering safely.
New York is alive and getting better. The change is palpable. Establishments have been reopening for business gradually. Restaurants, gyms, museums and movie theaters along with pedestrian and car traffic have returned. Hotel and airline bookings are up. In-person classes at public high schools are resuming this week. Vaccines are more readily available. Those who have been immunized are expanding their social circles, albeit tentatively. Yankee Stadium and Citifield will host the start of the baseball season with 20% fan capacity. Tourists are trickling back. Federal stimulus coins are jingling. Days are getting longer and warmer. And the spring selling season is well underway for New York City’s residential real estate market.
