Welcome to this week’s Streets365 Weekly. Each Sunday I take a look at the latest Manhattan residential real estate numbers, share what I notice about the market and discuss something happening in real estate that I think deserves our attention. The idea is to look beyond the individual deals we’re working on and consider what’s happening in the larger market.
Market Dashboard
Active Inventory — 6,027
New Listings — 396
Signed Contracts — 182
30-Day Contract Pace — 525
Median Days on Market
Under $1M — 79 days
$1M–$2M — 91 days
$2M–$4M — 82 days
$4M+ — 123 days
30-Year Fixed Mortgage Rate — 7.40%
These are the most current figures available to us.
What I Notice
The most interesting development in Manhattan this week is the change in buyer activity. After several weeks of increasing inventory and relatively weak contract activity, 182 contracts were signed during the latest reporting period. That’s a 61% increase from the previous week and the strongest weekly contract total since early August. It’s encouraging, although contract activity remains 16% below the same period last year.
Inventory continued to grow, reaching 6,027 apartments, but the pace of that growth has slowed. New listings declined to 396, and the weekly inventory increase was just 3.4%. Buyers now have more apartments to choose from than they did earlier in September, but fewer new listings are arriving each week. That’s a combination worth watching as October progresses.
What makes this particularly interesting is that buyer activity increased while mortgage rates continued moving higher. Freddie Mac reported the 30-year fixed rate at 7.40% on October 8, compared with 7.28% a week earlier and 6.30% a year ago. That’s the seventh consecutive weekly increase, and borrowing costs are now at their highest level in nearly three years.
I wouldn’t interpret one strong week of signed contracts as a change in the market’s direction. But it does tell us that buyers haven’t disappeared simply because financing has become more expensive. Some are finding apartments they want, making decisions and moving forward. The question for the next few weeks is whether that activity continues as the fall market develops.
Thought for the Week
Where Will the Next Generation of Manhattan Condo Buyers Find Their Apartments?
A report released this week by Corcoran Sunshine Marketing Group caught my attention because it looks beyond today’s market and raises a question about what Manhattan’s condominium market may look like several years from now.
According to the report, the pipeline of new entry-level condominium apartments is projected to decline dramatically through 2029. Apartments priced below $1,800 per square foot are expected to represent just 3% of the future new development market, with only 172 such apartments planned between 2026 and 2029. Developers are increasingly concentrating on higher priced properties, where the economics of new construction may be more attractive.
I think this deserves attention because New York already has a difficult affordability problem, and new construction isn’t necessarily going to make it easier for buyers who want to enter the ownership market.
There are good reasons why developers make the decisions they do. Land, construction, labor and financing costs have to be considered, and developers need to produce apartments they believe they can sell profitably. But when the economics increasingly favor expensive apartments, the choices available to buyers at more modest price points become limited.
For agents, I think there’s a longer-term question here. If new condominium construction continues moving toward the upper end of the market, where will buyers who want to own their first apartment find opportunities?
Existing condominiums will remain part of the answer. Co-ops will continue to be an important part of the New York City ownership market. But buyers who prefer a condominium because of its financing, ownership or rental flexibility may find that the choices available to them become increasingly expensive.
We spend a great deal of time looking at what’s happening in the market today. Sometimes it’s worth looking several years ahead and thinking about how the apartments being built now, or not being built, may change the choices our future clients will have.
George
Streets365 - Think Beyond The Deal