G+ June 2024 Market Update
Famous for its significant expense of living, New York City requires a significant investment in real estate costs. Filled by an energetic economy and famous status, it reliably draws in a rush of people looking for a piece of the NYC dream.
This month we unload all that you really want to be aware of, including middle home estimations, market propensities, and significant bits of knowledge for exploring this cutthroat real estate market. Here are the most recent patterns in the New York City real estate market.
Trends in the NYC Housing Market
The New York City housing market is in a state of transition. While record-high asking prices persist, buyers are starting to regain the upper hand.
Median asking prices remain high, with Manhattan reaching a new peak of $1.1 million in March 2024. This follows a year of steady growth, with prices across the city rising over 10% compared to March 2023. However, despite these high price tags, buyers are finding more room for negotiation.
The typical sale-to-list price ratio is nearing pre-pandemic levels, indicating a shift in power dynamics. In a seller's market, bidding wars drive prices up, and properties often sell close to or even above the asking price.
Conversely, a buyer's market allows for more negotiation, with sellers often accepting offers below the initial listing price. This is precisely what we're starting to see in NYC, with the sale-to-list price ratio approaching figures observed in 2019, when a glut of unsold condos led to a more buyer-friendly market.
Limited new listings are keeping the sales market competitive, especially for well-priced homes. This scarcity is a significant factor contributing to the buyer leverage we're seeing.
With fewer options to choose from, buyers are more likely to engage in bidding wars for properties that meet their criteria and are priced competitively. This creates a fast-paced market where attractive listings sell quickly.
Buyers Take Charge in a Buyer's Market
Despite high asking prices, there's a shift in power dynamics. The current market leans more towards buyers, who have more room for negotiation. This is evident in the sale-to-list price ratio, which is approaching figures seen in 2019, a time when buyer demand wasn't outpaced by limited inventory. This means that in many cases, sellers are accepting offers below the initial asking price.
Manhattan, with its luxury market, is experiencing this trend most acutely. Wealthy buyers are increasingly opting for rentals due to higher financing costs and economic uncertainty. As a result, sellers in Manhattan are facing a smaller pool of buyers with larger budgets, leading to more wiggle room on price.
Limited Listings Keep the NYC Housing Market Active
While buyers have more leverage, the market remains competitive due to a lack of new listings. Well-priced homes are flying off the shelves, selling quickly and often below the asking price. This suggests that sellers who are realistic about pricing will likely find buyers relatively quickly. However, homes that are overpriced may languish on the market for extended periods.
The scarcity of new listings is expected to continue this spring, particularly in Brooklyn. This limited selection will likely fuel bidding wars for desirable properties, especially in Brooklyn's brownstone neighborhoods. Here, townhouses are experiencing a surge in demand, with neighborhoods like Park Slope and Carroll Gardens witnessing brisk sales activity.
Beyond the allure of these historic homes, Brooklyn's appeal is further bolstered by a median asking price that remains slightly below the citywide average. This makes Brooklyn an attractive option for buyers seeking more space for their dollar compared to Manhattan.
Looking Ahead: A More Balanced NYC Market
The spring of 2024 saw a more balanced market compared to the past two years. While buyers had more negotiating power, competition for well-priced properties remains high. For buyers, securing a strong offer and partnering with an experienced local agent are crucial steps towards success.
A qualified agent can help buyers navigate the complexities of the NYC market, identify the right property within their budget, and guide them through the negotiation process.
Mortgage rates are likely to stay elevated in the near future. However, a potential rate cut by the Federal Reserve in the latter half of the year could incentivize more sellers to list their properties, increasing overall inventory. This, in turn, could lead to a more balanced market with more options for buyers.
Trends in the New York Real Estate Market
The New York real estate market in the first half of 2024 has presented a fascinating paradox for investors. On one hand, historically low inventory levels created a seller's market with rising prices.
On the other hand, increasing mortgage rates put a damper on affordability and tempered buyer enthusiasm, leading to a slight softening in sales activity. Let's delve deeper into these trends and explore what they might mean for investors.
Prices gazed upward as the Median Sales Price was up 6.2 percent to $383,500.
Pending Sales in New York State were up 2.0 percent to 24,352.
Closed Sales decreased 4.7 percent to 20,430.
Inventory shrunk 14.7 percent to 23,924 units.
Days on Market decreased 7.7 percent to 60 days.
Months’ Supply of Inventory was down 7.1 percent to 2.6 months.
Inventory Squeeze: A Double-Edged Sword
The ongoing shortage of available homes is a double-edged sword for investors. While it signifies a potentially strong seller's market, finding the right property becomes an uphill battle. Bidding wars and competition for even slightly desirable listings are likely to be fierce. This necessitates a lightning-fast approach and the ability to act decisively. Investors who can move quickly and present attractive offers may find themselves well positioned to secure deals.
However, the low inventory also presents a waiting game. With fewer options on the market, some sellers might struggle to find buyers willing to meet their asking price, especially if their property lingers on the market for an extended period. This could lead to increased seller motivation and potentially create buying opportunities for investors who are patient and strategic.
Sales Soften, But is it a Buyer Retreat or a Strategic Pause?
The dip in closed sales could be interpreted in a few ways. Rising interest rates undoubtedly affect affordability and may have discouraged some buyers from entering the market. However, it's important to consider the possibility of a strategic pause by potential buyers. With the market dynamics shifting, some buyers might be adopting a wait-and-see approach, waiting for the right opportunity or for prices to potentially stabilize.
The rise in pending sales towards the end of the quarter offers an interesting counterpoint. This could indicate pent-up buyer demand waiting for the right property to hit the market, or it could signal an adjustment of buyer strategies to the new market realities. Here, close attention to market trends and data in the coming months will be crucial for investors to understand if this is a temporary blip or the beginning of a sustained shift in buyer behavior.
Rising Rates: A Cause for Concern, But Not a Dealbreaker
The climb in mortgage rates is undoubtedly a concern for investors, impacting purchasing power and potentially leading to a decrease in the pool of qualified buyers. However, it's important to remember that interest rates are just one factor in the overall investment equation. Savvy investors will consider factors like rental income potential, long-term appreciation prospects, and overall property value to determine if a deal makes sense even in a higher interest rate environment.
The New York real estate market is complex, and these are just some of the considerations for investors in Q1 2024 and beyond. Remember, seeking guidance from a qualified real estate professional who understands your specific investment goals and risk tolerance is crucial for making informed decisions in this ever-evolving market.
New York Real Estate Market Forecast: A Look Ahead
The New York City metropolitan area, including Newark and Jersey City, remains a hot property market, with home values averaging a cool $654,172 (Zillow) – that's a healthy jump of 7.2% compared to last year.
Houses are also flying off the shelves, typically going into pending status within 23 days. But is this a gold rush destined to continue, or are there storm clouds gathering on the horizon? Let's dive into the data and see what the future holds for New York real estate.
A Market in Transition
The forecast of a 2.2% dip by April 2025 shouldn't send chills down the spines of long-term investors. It's important to remember that real estate markets are cyclical, and periods of rapid growth are naturally followed by periods of stabilization or correction. This is a healthy pattern that allows the market to catch its breath and prevents unsustainable bubbles from forming.
While there may be a slight price adjustment in the coming year, New York City remains a desirable and dynamic place to live, and property values are likely to continue trending upwards over the long term. Savvy investors will use this potential cool-down as an opportunity to enter the market at a more attractive price point.
Numbers to Know
Here's a snapshot of the current market to help you get a grip on where things stand:
Median Sale Price (as of March 31, 2024): $564,167. This is the real number most buyers pay, and it's a good benchmark for valuing properties.
Median List Price (as of April 30, 2024): $699,333. This is the price sellers ask for, and it can be higher than the eventual selling price.
Sales Over List Price (as of March 31, 2024): 44.7%. In a competitive market like New York, bidding wars are common, pushing the final price above the asking price.
Sales Under List Price (as of March 31, 2024): 43.6%. Not all properties spark bidding wars. This figure indicates a healthy balance in the market, with some properties selling below the asking price.
