Q2 2024 Newsletter

Today in Real Estate: Q2 Report ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏

Today In Real Estate

Dear friends and clients,

We hope you'll enjoy our Q2 market reports for Manhattan and Brooklyn below.  The data for Manhattan is finally showing some promise in terms of activity, although prices are down.  I have noticed two things on the ground  that I'd like to share with you here.

First, we are seeing that exceptional properties are moving at lightning speed, and un-exceptional properties are just sitting there, even with modest price decreases. By "exceptional," I do not mean a trophy property, but rather a property that has a unique feature that sets it apart from its comparables. For example, in June, my team listed two properties that each received multiple offers and went into contract almost immediately.  One is a condo in Williamsburg which has a spectacular backyard and nothing in its price range offering such a feature. The other is a one-bedroom coop in a very large complex on the Lower East Side, but unlike other properties In the complex, It is on a high floor and has a nice view and balcony. That coupled with our staging set it apart from all of the other listings in the building. 

My other observation is that the buyers we are working with are serious and ready, but also impatient. They are either finding what they want and making an offer immediately, or they are deciding to step back out of the market rather than waiting for more properties to come on. I suspect this dichotomy has to do with buyers' expectations about the market. Those who are expecting a modest negotiability or discount, or just an opportunity to get what they want without much competition, are seizing the moment. Others have a misconception that exceptional properties can be had for a steal, but prices have not shifted so dramatically, and inventory of exceptional properties is limited. With this in mind, we continue to encourage sellers of exceptional properties to list, but for those with unexceptional or challenging properties, it might be best to wait until the buyer pool expands. 

Please don't hesitate to reach out with any of your real estate questions. If it's not in my wheelhouse, I have a terrific network that I can tap into.  Until next time...

For the first time since the rise in mortgage rates began pressuring the market in mid-2022, transaction activity -- both signed contracts and closed sales -- was up annually and quarterly.  While the year-over-year gains were more modest, the quarterly increases were more than we expected, indicating that buyers might finally be coming off the sidelines. There was also, finally, a significant (12% year-over-year) uptick in new listings. While active listings had already been climbing, this had been due to fewer sales rather than an infusion of new inventory, until now. 

Active Listings
+20% Q-o-Q
+3% Y-o-Y

Signed Contracts
+13% Q-o-Q
+3% Y-o-Y

Closed Sales
+34% Q-o-Q
+1% Y-o-Y

These positive trends in inventory and transaction activity were accompanied by -- and possibly driven by -- a reduction in prices.  Closed sale prices fell across the board for a second consecutive quarter, which hasn’t happened in seven years. Median sale prices were the lowest Q2 figure we’ve seen since 2018, and perhaps more significantly, average price per square foot was down by double digits for a second straight quarter, bringing us down to prices we haven't seen since 2015.

Median Sold PPSF
-2% Q-o-Q
-11% Y-o-Y

Median Sale Price
+12% Q-o-Q
-2% Y-o-Y

Midtown East which tends to have lower prices and had been particularly slow 2023, experienced a 15.2% increase in sales compared to the previous year. The Upper East Side which is now perceived to have good values also saw a 12.7% increase in signed contracts year-over-year and consistent price improvement. Downtown, typically the strongest performing area of the city, saw a decrease in contracts compared to this time last year, as did Fidi/BPC and the Upper West Side.

In June, transaction activity and new listings began to dip. It seems that the market is now on summer vacation, and all eyes are on the Fall with expected rate cuts in September and the election in November, making it anyone's guess how things will play out.

While the data shows that supply has gone up, this has been driven by an increase in inventory in South Brooklyn (which now has 53.2% of total inventory versus what we'd expect around 47.1%). Low inventory continues to plague North and Northwest Brooklyn, and this has contributed to fewer contracts and higher prices boroughwide. 

Active Listings
+33% Q-o-Q
+15% Y-o-Y

Signed Contracts
+23% Q-o-Q
-7% Y-o-Y

Both median prices and price per square foot grew since Q1, and were up substantially compared to last year. In addition to low inventory in North and Northwest Brooklyn, other factors included an increase in new development closings and relatively low activity in the lower end of the market in South Brooklyn.

Median Sold PPSF
+8% Q-o-Q
+4% Y-o-Y

Median Sale Price
+18% Q-o-Q
+15% Y-o-Y

Unsuprisingly North and Northwest Brooklyn had the highest prices, driven by resale prices in Brooklyn Heights, BoCoCa, and Park Slope, and new development closings in Williamburg, Dumbo, and Downtown Brooklyn.

The real question for the Fall is mortgage rates. In South Brooklyn, which has lower price points, buyers are more rate-sensitive, which has depressed this largest subsection of the borough. Elsewhere, specifically in North and Northwest Brooklyn, interest rates have not tempered buyer demand (so for sellers it's always been a strong market and will continue to be so), but rates have kept many would-be sellers from up- or down-grading, causing a lockdown in inventory. 

Mortgage Rate Update

Jerome Powell started off Q2 by saying that the American economy “doesn’t feel like it’s suffering” from the Fed keeping rates high. Multiple reports suggested that inflation wasn’t slowing down as previously hoped, and the Fed scaled back their projected rate cuts from three rate cuts in 2024 to just one. This caused rates to jump by 5/8 of a percent in April/May. 

Interestingly, while rates did not improve in Q2, for the first since rates began climbing, the percentage of transactions with financing rose. However, more than 60% of transactions in the last year have been all-cash purchases, a figure that is still much higher than we are used to.

Since the close of Q2, reports have showed both inflation and the job market cooling, which has pushed rates down in July. Investors are now pricing in an 89% chance of at least one rate cut by the September 17-18 Fed meeting.

RATE DATA BASED ON BASED ON CITIBANK'S 30-YEAR FIXED-RATE FOR NON-CONFORMING LOANS, COURTESY OF ZACK TOLMIE, SR. LOAN OFFICER.

The cost of owning a home in the US has increased 26% since 2020, as expenses including taxes, insurance and utilities all soared during a period of high inflation across the economy.
(BLOOMGBERG)

Even with stubbornly high mortgage rates, Manhattan's residential market has rebounded. For the first time in seven quarters, sales of condos and co-ops rose on an annual basis. Listing inventory also rose for the first time in five quarters.
(THE REAL DEAL)

In April, potential homebuyers in New York City opted to lease rather than buy, leading to a notable increase in rental prices across Manhattan, Brooklyn, and Queens. That demand is helping fuel a trend toward higher rents for Manhattan.
(BRICK UNDERGROUND)

While surging mortgage rates and housing prices have taken away consumers’ purchasing power, low supply has kept the market competitive. As a result, affordability has tumbled dramatically from the early days of the pandemic. These six charts help explain what this unique moment looks like — and what it means for you.
(CNBC)

Americans weighed down by fast-rising prices for three years just received more encouraging news on the inflation front. The Consumer Price Index, dropped 0.1% from May, which helped to slow the annual rate of inflation to 3% from 3.3% in May
. 
(CNN)

Explore a collection of our favorite new development listings throughout Manhattan and Brooklyn.

Listings & Recent Sales

JUST SOLD - BUYER REP

3 BD   2 BA   $2,300,000

2 BD   2 BA   $1,425,000

IN CONTRACT - BUYER REP

2 BD   2 BA   $1,650,000

69 West 9th St, #11CDE

2 BD   3 BA   $1,695,000

2 BD   2 BA   $1,795,000

Hear it from our clients! 

"Since living in NYC, I have moved a few times and it's no exaggeration to say that Isil is by far the best realtor I have ever worked with. I worked with her for both buying and selling in two complicated co-op situations, and she made the process as stress free as possible. I always knew that she would advocate for me and had my best interest in mind. Additionally, she and her entire team are a true delight to work with and to be around. I can't recommend her highly enough!"

 -- Victoria, Seller of West Village 
Co-op and Buyer of UWS Co-op

Office: 646-982-0353

Compass is a licensed real estate broker. All material is intended for informational purposes only and is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description or measurements (including square footage). This is not intended to solicit property already listed. No financial or legal advice provided. Equal Housing Opportunity. All Coming Soon listings in NYC are simultaneously syndicated to the REBNY RLS. Photos may be virtually staged or digitally enhanced and may not reflect actual property conditions.