Headlines about the national housing market often do not align directly with what is happening in the New York City real estate market. If you are thinking of buying or selling a home in 2024 in the city, make sure you understand what is happening on a granular level, so you do not create a strategy for approaching the market which is unrealistic.
The median price of a single-family home across the United States has doubled in the past ten years. Whereas in Manhattan the median price only increased by 31%. Much of the gain was between 2014 and 2016 when the median price jumped from $895,000 to $1,050,000 with steady slow gains since then.
If you are a buyer, waiting for the prices to come down is not a viable strategy. Instead, buy wisely for the long term. The best NYC real estate agents always know how to identify value. Below are my predictions for the 2024 market. Spoiler alert, prices are not coming down as demand is likely to surpass the supply in many segments of the market.
DEMAND: A stable investment
The recent Federal Reserve announcement indicating mortgage rates will come down next year will drive demand. In the final weeks of 2023, we saw pent up demand bringing more buyers into the market adding new life to properties priced below $2 million as mortgage rates came down well over a point.
Meanwhile the luxury market has shown strength all year as many buyers purchasing over the $4 million mark are paying all cash. Yet transaction volume across price ranges has been off since the fourth quarter of 2022 which is when mortgage rates started climbing.
By some accounts the 2023 transaction volume is down 14% and is significantly higher in Northern Manhattan. Some buyers who relied on a mortgage to purchase forged ahead anyway this year because rental prices remain high despite showing predictable monthly dips at the end of the year due to seasonality.
The luxury market demand is likely to stay strong because of the terrific offerings across the city. Since developers started building condos in the 1980’s, Manhattan has enjoyed a global reputation as a stable place to invest. New development condominiums are attracting buyers from Tribeca Green to Claremont Hall, many offering new pricing and negotiability which could disappear when demand ticks up.
SUPPLY: Short supply under $3 million
In mid-December there were 7,065 homes on the market with a median list price of $1,774,000. The median price for sold properties at the end of the third quarter was $1,175,000.
At first glance you might assume prices had increased significantly, but this is not true. Rather there is a shortage of properties in the lower priced tiers. Jonathan Miller, Principal of Miller Samuel Inc., posted an interesting study in November analyzing Manhattan’s months of supply by price:
- Properties priced below $3 million are in shorter supply than those that are higher priced. Anyone looking to purchase a co-op over $3 million will have a greater choice headed into the new year and especially on the Upper East Side but a one bedroom co-op is in much shorter supply.
- Upper West side condos still have a good range of supply whereas the inventory is noticeably more sparse downtown.
If you are considering purchasing a NYC condo in 2024, get an early start. The pipeline of new condominium offerings will be down in the future. NYC developers have pulled back because of increased costs of building and the expiration of the 421a tax abatement. The math no longer works for many of them. Even stalwart NYC developers have been forced to look for opportunities outside the city.
Northern Manhattan is certainly likely to see a dearth of offerings in resale and new development. The majority of Harlem condos were built in the past fifteen years luring buyers uptown by offering lower common charges, tax abatements and efficient floor plans to keep the aggregate price low. These buyers have low mortgage rates which when combined with the low monthly rates will keep many owners from selling in the coming year.
RENTAL PRICES: Will renters come back?
Rental prices in 2023 are still 2% higher than 2022 and hover around the $4,000/mark. Price growth is no longer accelerating but rents are still historically high. Demand for rentals also remains robust but is moderating. More attractive pricing could bring renters back to Manhattan.
This is all good news for anyone who is a real estate investor. Most landlords are optimistic about 2024. Downtown properties are particularly in high demand. Those asked to come back to work this year and those simply wishing to be back in the city are keeping demand high and opting to live near where they work.
TRENDS: Empty nesters to NYC?
Many New Yorkers who left the city for other parts of the country are returning home to purchase NYC real estate. There is simply no other place like it. We are also seeing more empty nesters ready for their next chapter. Having taken advantage of higher sale prices in the surrounding suburbs, they have cashed out and are looking to call Manhattan home.
Looking for more insights into 2024? Check this Curbed.com article that I was quoted in for more.
Those who already call this great city home and locked in a low mortgage rate may consider renovating rather than selling. And yes, there are those moving out of the city to call sunnier locations home but new people always arrive to chase their dreams in the city that never sleeps.