Buyers Are Back, But Home Sales Remain Modest
Rising interest rates have made NYC buyers more cautious this year. They are looking at properties but slow to commit. Properties in need of renovating are passed over for those which are move in ready or newly renovated.
The recent spate of bank failures added to buyer nervousness yet NYC real estate remains more of a safe haven than ever now the Crypto currencies and NFTs are less enticing. While buyers recognize that Manhattan residential real estate is a safe long-term play, they are choosing carefully to maximize their gains.
The good news is they are finding some interesting new pricing.
For the week ending May 5, 2023, The Corcoran Group reports, “262 contracts were signed in Manhattan last week, up 22% compared to the previous week but down 31% year-over-year.” Buyer demand is inching up turning around a six-month trend. Transaction volume slowed down toward the end of 2022 and persisted through the first quarter of this year. At the start of the year an average of 220 contracts were signed per week.
Now as buyers face stubbornly high rental prices, a mortgage rate of 6-7% seems less onerous in comparison to escalating rents over which they have no control.
Still a three percent increase in the average potential mortgage rate is eating into affordability for many would be buyers. Despite the increase in housing costs, locking in a fixed monthly rate is a smart idea.
Some buyers who do not expect to stay in their home longer than five years are opting for an Adjustable-Rate Mortgage to keep their monthly expenses down while others opt to pay all cash. One expense buyers cannot tamp down are the monthly common charges.
Many buildings across the city were forced to increase the common charges last year as the cost of running buildings went up with inflation pushing the price of electricity, fuel, labor and other ancillary costs.
Last week’s news of increased signed contracts heralds the arrival of the Spring market in Manhattan — albeit a few weeks late. There is reason for optimism beyond the uptick in signed contracts. Inquiry levels are up and sellers have had time to adjust their expectations.
For example, the Boland Team’s Murray Hill condominium listing which is 2,310 square feet and boasts unobstructed East River views from the 32nd floor was just reduced to $2,995,000.
A top floor apartment with expansive views for under $1,300/square foot is a bargain considering that the average asking price for a Murray Hill condo is $1,427/square foot. On average the asking price of a Murray Hill condominium has come down by 7% recently.
Further North in Harlem where many of the condominiums are less than fifteen years old, you can find some compelling buys. Sellers are ready to do deals as evidenced by 34% of the active condo listings having been reduced by an average of 8%. The neighborhood is desirable yet buyers pause because increased mortgage rates are making housing costs more expensive in a neighborhood which has been known for affordability.
After months of holding their prices, sellers realize they must reduce their listing prices to meet buyers where they are. One seller immune to such pricing motivation is the owner of PHB at 111 Central Park North which is the crown jewel of the building with spectacular Central Park and Mid-town views. At $14,500,000 the sale price may be justified for such views once construction of the New Harlem Meer Center is completed next year.
Upper West side condos are posting similar price reductions to other neighborhoods coming in at an average of 9%. For Upper West side condos, the aggregate pricing is higher and has a greater range. Current pricing ranges from $465,000 for a ground floor studio on Central Park all the way up to a $40,000,000 for a dramatic Penthouse with sweeping views at 25 Columbus Circle. The average price is closer to $4,800,000 for all Upper West Side condominiums. Driving this average is the proliferation of truly special new development condominiums offering modern design and highly desirable amenities.
Fans of HBO’s “Succession” should note that the Penthouse at 200 Amsterdam was used as Roman Roy’s apartment. While the Westly on Broadway and 91st Street just closed PHA for $13,500,000, setting a new bar for Upper West side condos above 86th Street. Building amenities include a rooftop pool and stunning views of the Hudson River.
Claremont Hall in the heart of Columbia University offers a spectacular opportunity for future homeowners and investors alike to snag a Robert A.M. Stern designed residence at a great price while they last. Architectural fans are likely to swoon over the custom Gothic Collegiate paneling in the lobby and a fully refurbished Refectory which includes a forty-eight foot salt water pool.
In Carnegie Hill 180 East 88th Street is a new addition to the condo offerings. This super modern tower pays homage to the classic Upper East style of living while bringing in a fresh new perspective to the neighborhood.
Anyone who eschews a shiny new tower but still wants the flexibility of owning a condominium may consider a Carnegie Hill condo. The neighborhood is known for some lovely pre-war condo buildings with typical pre-war architectural details such as crown molding and old-world facades.
All of this desirable ornamentation comes at a price. There is a 3 bedroom, 3 bath room fully renovated home at The Gatsby listed at $3,000,000 or $1,875/square foot. If you want old world charm with new construction, take a look at 1289 Lexington Avenue located at the corner of 86th Street. This discrete building with sixty-one residences was designed by HOK Architects with custom interiors by Architectural Digest 100 Designer Lee Mindel of Shelton Mindel.
These condos average approximately $2,000/square foot and it should be noted that some of the apartments have priced reductions of up to 10%. The luxury market has been a bright spot in the market over the past couple of years but not even this stunning building is immune to the current economic trends.
New pricing and continued high rental prices will continue to drive deal volumes in the coming months. While the NYC market hasn’t faced the same inventory shortages other markets across the United States are facing, if buyers start taking advantage of current pricing, we could see fewer bargains a few months from now. My advice to buyers is, Carpe diem!