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July 2023 Market Recap

In July, Manhattan contract activity was essentially on par with last year and within the realm of historical averages, though on the lower range of what we are used to seeing. New contracts declined from June (~16%) and throughout the month, aligning with seasonal patterns. Inventory levels remain historically low, with new listings in July down 16.7% vs. last year.

While the market is slow, prices have not budged much, due both to the strength of the high-end market and the lack of inventory/activity in general. In fact, median closed sale prices only decreased by ~2% from last year, despite deals being negotiated in a far less favorable interest rate environment (with rates up ~2%+ since then). The average days on market currently stands at 68 days -- a 10% decrease year-to-date and a 3% decrease from the previous month, but a significant 36% increase from the previous year.

It is interesting to note that ~65% of all deals in the second quarter were cash, which disproportionately affects the higher end of the market (75% of deals over $5M were cash). So while interest rates have cooled the lower end of the market, overall metrics are buoyed by the higher end.

Listing traffic, new inventory, contract activity, and open house attendance have all declined sharply since Memorial Day. Though traffic had been building, open house attendance changed course in June with almost half of all open houses reporting zero visitors consistently each week. Inventory had been surpassing historical averages in the earlier part of the quarter, but fell short in June, likely due to sellers holding out in the face of diminished demand.

The Brooklyn market continues to be defined by two words: inventory constraint. While July contracts signed were essentially level with prior years, new listings were down compared to both 2022 and 2021, when inventory levels had already hit record lows. This has led to a net supply deficit, with listings absorbed faster than they can be replenished. It is easier to sell a property in Brooklyn now than any other July since 2019, even with rates making the cost of ownership higher. Despite such favorable conditions for sellers, many are staying put rather than listing because of the lack of options (and relative costs) of moving within the borough. As a result, the Brooklyn market has, in some ways, felt slower than Manhattan; there is simply nothing for buyers to even go out and see.Despite all this, prices in Manhattan have not declined significantly and remain neutral. There is some negotiability, but not enough to motivate buyers causing the lack of activity/transactions. As expected, days on market has increased and – 29% of homes sold in Q2 took 180+ days to enter contract. We don't expect to see many price reductions until fall, as sellers may be waiting out the slow summer in hopes of greater buyer interest and traffic in the fall.

On July 5th the Fed released the minutes of its June 16th meeting, which showed that we had been very close to an 11th straight increase, and that "the moderate pace of interest rate decisions" would continue. In response, rates spiked but eased with the July 12 release of the Consumer Price Index Report. The Fed's 25 bps raise at its July 26 meeting was anticlimactic as it was long expected and banks had already factored it into their rates. Despite the hawkish tone in June, it’s not expected that the Fed will be as aggressive in further rate hikes in 2023, suggesting rates could stay around current levels. But as Yogi Berra said, "It's tough to make predictions, especially about the future."

With both signed contracts and new listings down in Manhattan and Brooklyn and a seasonal lull anticipated in August, the summer is shaping up as a long one for agents and brokerages. (THE REAL DEAL)

Mayor Eric Adams launched the "Get Sheds Down" initiative to improve sidewalk construction sheds and scaffolding in NYC. The plan encourages prompt removal and replacement with aesthetically pleasing alternatives like safety netting. (NY1)

Rental brokers oppose a Council bill that would stop landlords from charging applicants for broker fees. They argue it may lead to fewer listings, higher rents, and less experienced brokers.

The share of Manhattan home purchases without financing jumped to almost two-thirds (65%) of all deals in Q2, a record high in nine years of data-keeping. Cash buyers represent 75.4% of all sales properties $5 million and up. The high end of the market is showing a lot of strength with the median sales price for the luxury market was a 3.9% increase over the prior year and the fifth rise in six quarters. (BLOOMBERG)


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