November 2023 Market Recap

Though interest rates have dropped substantially in the last few weeks, it was not enough to boost activity levels which continue to lag behind seasonal averages. After an 18 month slog, sellers are adjusting as both asking prices and closed sale prices have declined. Despite all factors pointing to a "buyer's market," buyers -- particularly on the lower end -- have not been motivated.

As rates have begun to dip, it will be interesting to see if there's a December awakening. Until next time!

The market in November continues to be below seasonal averages. While supply has caught up to norms, contracts signed continue to trail behind.

Activity across all stages of the transaction -- from open houses to closings -- are well below last year and seasonal averages. This is especially true in the the under-$2M market. which has been most sensitive to higher rates. Anecdotally, our team has seen the same thing. All of our active buyers since May have been looking around or above $2M, whereas we usually work with a wider range of budgets including first-time buyers on the lower-end.

As expected, closed sale prices continued to decline and we expect this trend to continue as deals reached this Fall will be reflected in closed sale data in the coming months. It is telling that median prices held almost steady while price per square foot declined substantially, indicating that the mix of activity has skewed to the higher end.

This month Brooklyn data closely mirrored Manhattan with overall metrics firmly showing that it is a "buyer's market" on both sides of the river. However, certain neighborhoods, particularly in NW Brooklyn, continue to buck trends and show resilience and strong demand, making up an outsize share of contracts signed relative to inventory.

Similar to Manhattan, median prices decreased less than price per square foot, indicating comparatively ore deals on the higher-end and in the more in-demand neighborhoods.

With interest rates falling, things might bounce back quickly in Brooklyn. According to a real estate attorney who does a large share of transactions and tracks this data, about 75% of deals he is seeing now involve financing compared to less than 40% in the Summer/early Fall.

Mortgage rates have steadily fallen (more than 0.5%) since the Fed did not raise rates at its November 1st meeting, the second consecutive meeting where they held rates steady following 11 straight rate hikes. Along with the October Jobs Report, which indicated that inflation might be under control, the market has reacted on the assumption that rate hikes are behind us and we can expect the Fed to even lower rates by next Summer.

If you come across a pricing history that doesn’t make sense, you may be seeing the ripple effect of a closing credit, a hush-hush discount that sellers give to buyers at the closing table that can throw comps off kilter. Brokers say more buyers are asking about credits and more sellers are agreeing to them in the current market to move deals along. (BRICK UNDERGROUND)

Following the plaintiff's victory in the Sitzer Burnett commission lawsuit, attorneys filed suit against REBNY targeting their policy that the brokers “shall each be paid an equal share of the commission as specified in the Exclusive Listing” which they claim has caused sellers to pay inflated broker commissions. (HOUSING WIRE).

Manhattan is a focal point of global real estate interest, and its dynamic market reflects various economic, social, and geopolitical factors. Given its relative importance, there are five critical areas to influence the Manhattan real estate market in the upcoming months. (FORBES)

Commercial leasing activity in November was underwhelming and and supply outpaced demand leading to an increase in available office space at the end of the month. (THE REAL DEAL)

October 2023 Market Recap

While October was lackluster (especially on the lower end of the market which is more sensitive to financing), many are eyeing end-of-year price cuts to spur activity between Thanksgiving and Christmas.

In other news, the real estate world was shaken by the federal jury verdict in the antitrust suit against the National Association of Realtors and several major brokerages. While this has the potential to reshape the industry, the sky is not falling and I'm excited to share in coming months how we will be adapting to these changes.

Please don't hesitate to reach out with any questions. Until next time!

While inventory levels have normalized, activity in Manhattan is still lagging. Open house attendance has been in decline since Labor Day, and though signed contract figures are up relative to last month and last year (which were both low points), figures are lacking as a percentage of inventory.

Median days on market, negotiability, and listing discount are all up materially compared to last year, favoring buyers. While closed sale prices have ticked down only slightly, this reflects deals negotiated 45-120 days ago and we expect prices to further adjust to market conditions as Fall deals close and as motivated sellers drop prices to strike deals before the new year.

Brooklyn continued to show strength relative to Manhattan. Contracts signed were level with last year despite even less inventory, indicating extraordinary absorption levels.

Though borough-wide prices were down slightly, it is interesting that this is based on a substantially fewer number of transactions (almost a third less than the number of closed sales last October). Also, as we've said before, these metrics are not indicative of the more in-demand neighborhoods where homes continue to trade above asking price.

October saw two jumps in mortgage rates -- first as an overreaction to the Oct. 6 jobs report and again in anticipation of the November 1st Fed Meeting and the November 3rd jobs report. However, the November Fed meeting and subsequent weak jobs report seemed to allay concerns of another rate hike this year, pushing rates down to 6.892% APR so far in November.

A federal jury ruling that the National Association of Realtors and brokerages had conspired to artificially inflate commissions, has the potential to transform the U.S. real estate industry by changing how buyer's agents can be compensated. (NYTIMES)

In September, Manhattan's median rent slightly decreased to $4,350 from $4,400, indicating more lease renewals as landlords strive to retain tenants, with rent affordability improving marginally amid a shift attributed to market normalization rather than short-term rental restrictions. (CURBED)

New York's neighborhoods are not only shaped by developers and brokers but also by the people who live in them. Check out NY Times' extensive "neighborhood" map, created from over 37,000 responses, which offers a unique look at the city's neighborhoods. (NYTIMES)

Mortgage rates are down over the past week, with the 30-year fixed rate mortgage at 7.77%. The average rate on a 30-year fixed rate mortgage surpassed 8% in mid-October for the first time since 2000. (MARKET WATCH)

August 2023 Market Recap

While transaction activity in August lagged compared to 2021 and 2022 levels, the main indicator – contracts signed – was on par with historical averages. Despite record-setting interest rates, prices did not decline month-over-month and year-over-year due to unusually low inventory levels, and competition for well-priced desirable listings remains robust.

We expect an influx of new listings this month, as we do every September, but to what extent this will track with historical norms – or if inventory will remain constrained – is a big unknown. If interest rates appear to stabilize or even decline, it would be a release valve for pent-up listings; however, most don't expect a significant uptick in activity until spring or fall of next year.

In Brooklyn, inventory levels remained at historic lows last month, with new listings and total inventory figures down double digits once again. Closed sale prices declined slightly and days on market ticked up, although - as we've come to expect - this does not necessarily reflect the market conditions in the most in-demand areas, specifically North Brooklyn (Williamsburg & Greenpoint) and Northwest Brooklyn (BoCoCa, DUMBO, Brooklyn Heights, Fort Greene, Prospect Heights, Park Slope, etc.) where we are still seeing bidding wars and over-asking closed sale prices. In August these areas accounted for only 28% of active inventory, but 36% of all contracts signed.

On the other hand, South Brooklyn inventory, primarily 1-2 family homes, made up 57% of total Brooklyn inventory but only 48% of signed contracts. Declining prices for houses – the chief property type in this area – contributed the most to Brooklyn's overall decline in prices; condo sale prices actually increased and coop prices remained unchanged borough-wide in August.

Mortgage rates continued to tick up, peaking at just under 7% for jumbo loan sizes on August 22, a 21-year-high. However, the most recent Jobs Report, released on September 1, gives some cause for optimism on the rate-front because it showed that the job market is finally cooling, which is good news for rates.

The US had been experiencing stronger-than-expected job growth for a very long time, and the Fed has been holding out for sustained below-trend growth to ensure inflation is on track to reset to their 2% target. The most recent report indicated that fewer jobs were added to the American economy than expected, and unemployment rose from 3.5% to 3.8% in August. This is exactly what the Fed is looking for to stop rate hikes. While there hasn’t been a significant improvement on mortgage rates yet, we may see a small one as we get closer to the Fed Meeting later this month. While we are not expecting a dramatic drop in rates this fall, we are hopeful that the Fed is done with the rate hikes, and we will begin to see a slow but steady decline over the rest of this year and into 2024.

The end of AirBnB in NYC? Local Law 18, effective as of Tuesday, limits how Airbnb operates in the city - effectively banning it entirely for many guests and hosts. From now on, all short-term rental hosts in New York must register with the city, and only those who live in the place they’re renting—and are present when guests are staying—can qualify. (WIRED)

Goldman Sachs now predicts a 15% chance of a recession, down from 20%. Bank of America and JPMorgan also lowered recession calls. (CNBC)

After more than a decade of rock-bottom interest rates, real estate lenders and borrowers in New York City are in a precarious situation. The rapid rise of rates and declining property values in some sectors - most notably commercial office buildings - have prompted lenders to be more selective about what sectors they lend in, and to whom. (THE REAL DEAL)

US homebuilder stocks have defied conventional wisdom about the effects of rising mortgage rates, rallying furiously and attracting an $814M bet from Warren Buffett’s Berkshire Hathaway. Shares in DR Horton, Lennar and NVR, which Berkshire disclosed it owned this week, have risen about a third apiece this year, far outpacing the S&P 500 stock index. Rising rates have proved a blessing for homebuilders because their rapid rise has in effect trapped many current owners in their properties, reducing the stock of existing houses for sale and driving would-be buyers to new properties. (FINANCIAL TIMES)