Market recap:
- Market Pulse: Manhattan sales data indicates sentiment (# of contracts signed vs supply) has been steadily improving since May 2024 and is now significantly higher than in 2019, 2020, 2022, and 2023. Sales discounts are being diminished further indicating a market in equilibrium (no clear advantage for buyers or sellers). Luxury, larger, renovated homes continue to lead the way for most in demand apartments. There is, on average, a 18% premium for renovated homes vs unrenovated homes in Manhattan, 25% premium in Brooklyn (ppsf gap) in 2024. There are signs for counter cyclical trend of higher contract activity in November 2024 - February 2025 vs previous years, but seller's should not view this as a price increase but additional liquidity to sell into. Demand is remaining above average with dwindling supply as some sellers hold off for Spring 2025.
- Buyer approach: Mortgage rate relief only came briefly. The NYC market is continuing to stay in a tight price range, and unless you're looking to buy an apartment that requires a significant renovation you should not expect a major discount. Your leverage is slowly decaying as confidence continues to rise in NYC real estate, and as rental growth starts to top out this brings new/more buyers to market.
- Seller approach: Liquidity has continued to increase for sellers as seasonal fall listing season began. This is not a sudden surge sellers should hope for, but is a larger shift in sentiment as the market continues to trend above the challenging selling conditions of the past 4/5 years (excluding 2021). Sellers still looking to move their homes need to revisit asking prices since contract activity is increasing while supply remains low.
- Landlord/investor approach: The median asking rent in Manhattan rose 2.4% year-over-year to $4,300 in October, In Brooklyn, the median asking rent increased 2.9% year-over-year to $3,499, The median asking rent in Queens was $3,000 in October, up 3.4% from a year ago. We are seeing a slow down in rent growth and an increase in rental concessions heading into the winter months (1 in 5 rentals offered a concession). Expect less demand on rentals going into the winter, but spring 2025 should see reacceleration of rental demand. Historically, we see a shift that more renters look towards purchasing vs renting when rental growth slows down.
Bull case for NYC real estate?
- We have been stabilizing for several years, close to a decade of slow and steady sales, but close to no price appreciation. The biggest downturn of the market was during the deep low cycle in the 2020 (covid) era of such unknowns. Unlike other major metropolitan areas that have experienced significant price surges—some to unsustainable levels—Manhattan’s real estate prices have remained relatively flat. This stagnation positions Manhattan as an undervalued market with substantial growth potential. As investors recognize this disparity, capital is likely to flow back into the city, driving up property values.
- The pandemic prompted some to seek suburban or rural living, but people are returning to urban centers as offices reopen and city life resumes. For some, there’s a renewed appreciation for the conveniences and opportunities that city living provides, from shorter commutes to access to world-class amenities. This shift back to urban preference boosts demand for Manhattan real estate.
- Allure and depth of owning a piece of Manhattan real estate is global due to Jobs, Finance, Tech, Schools, Hospitals, Nightlife, Entertainment, etc.
- International buyers have historically viewed Manhattan real estate as a stable, blue-chip investment. Travel restrictions and global economic uncertainties during the pandemic temporarily reduced foreign investment. Now, with borders reopened, foreign investors are returning, attracted not only by the potential for capital appreciation but also by the strength of the U.S. dollar and the stability of the American economy. Manhattan residential real estate offers a safe haven for capital amidst global uncertainties.
Important news and Events in Real estate:
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