October 2023 Newsletter

October 2023 

October Newsletter —

Fall is officially here! In this month's newsletter, we cover the Q3 2023 market update, take a closer look at recent flooding, and more.

Market Update

As we close out Q3 and move into the final quarter of 2023, we're looking at many of the same trends we've been seeing and predicting all year: the New York City real estate market continues in the direction of normalcy after the artificially high sales of 2021. Meanwhile, increased interest rates and economic concerns are slowing both buyers and sellers, which then drives the rental market's ongoing record high pricing and tight inventory.

Interest rates are at a two-decade high with a chance of an additional hike before the end of the year. According to Freddie Mac, the cost of a 30-year fixed rate $300,000 mortgage has risen from 6.09% in early February to 7.31% at the end of September. This can be especially daunting for first-time buyers. It also creates a reluctance to sell for anyone who purchased or refinanced before the Fed's recent measures; those who might have been inclined to list their properties are now opting to stay and renovate. Other sellers have been encouraged by the lack of inventory and have listed their apartments at higher price points than their property's true market value. But, as more and more homes are sitting on the market for six months or more, concessions and discounts are rising. Cautious buyers facing current mortgage rates are less willing to settle and more willing to play the waiting game. Still, motivated buyers and serious sellers are finding each other and making deals.

In Manhattan, things are beginning to resemble the market of 2016-2019 more than the period immediately post-pandemic. Downtown was the most robust area in Q3, claiming 29.3% of sales and accounting for the highest year-over-year increase in median sales price (10.2%), while many classic Central Park-area co-op listings languished. In fact, Miller Samuel reports that signed contracts in September for luxury apartments ($4 million and up) fell by 50%.

Brooklyn remains the hottest borough for home buyers under 50, but they’re facing the same interest rate considerations as Manhattan. The decrease in average and median sales prices in Northwest Brooklyn shows that many sellers are ready to compromise. Brooklyn inventory actually increased almost 10% quarter-over-quarter with less than a 1% decline year-over-year. This, combined with a leveling-off of year-over-year decreases in contract activity, is a strong indicator of the Brooklyn market's long-term resiliency.

Let's take a closer look at sales trends in both boroughs.

Manhattan Snapshot

Median Sale Price

-2.3%
Quarter-Over-Quarter

+1.1%
Year-Over-Year

Contracts Signed

-28.7%
Quarter-Over-Quarter

-9.3%
Year-Over-Year

Average Days on Market

168
Days on Market Q3 2023

26%
Properties with 180+ DOM Prior to Contract

Inventory

+1.4%
Quarter-Over-Quarter

-4.9%
Year-Over-Year

Source: Compass Q3 2023 Manhattan Market Report

Brooklyn Snapshot

Median Sale Price

+2.3%
Quarter-Over-Quarter

-1.5%
Year-Over-Year

Contracts Signed

-28%
Quarter-Over-Quarter

-15.1%
Year-Over-Year

Days on Market

125
Average Days on Market Q3 2023

19%
Properties with 180+ DOM Prior to Contract

Inventory

+8.5%
Quarter-Over-Quarter

-2.8%
Year-Over-Year

Source: Compass Q3 2023 Brooklyn Market Report

Manhattan Q3 2023 Market Report

Brooklyn Q3 2023 Market Report

Deep Dive: Flash Floods, Real Estate & You

It's no secret these days that New York City has a flooding problem. Let's take a closer look at what's causing it, what we can do about it, and what it means for real estate.

WHY WE FLOOD: 
Climate change has already led to the reclassification of New York City from continental to humid subtropical, defined by humid summers, mild winters, and intense rainfall. Prediction models suggest it's only going to get worse from here as record high temperatures continue and sea levels rise. On top of that, NASA recently announced that New York City is sinking at a rate of half a foot per century as land that was lifted up by long-gone Ice Age glaciers is slowly resettling. Then, of course, there are the areas we built on landfills.

To really understand what's happening and why, though, we have to consider the New York of the past. There aren't many reminders of what was here before us in the concrete and steel grid of Midtown, but undeveloped Manhattan was an ecological marvel. There were 21 ponds and salt pannes, 66 miles of crisscrossing, trout-filled waterways, multiple springs, and a kettle pond full of glacial water. Tribeca, Pearl Street, the East Village, and more were swampy, fertile wetlands. Then, beginning in the early 19th century, the inhabitants of Manhattan leveled hills, filled in marshes and ponds, built sewers around the streams, and created new land downtown with landfill and rocks from other excavations. The water didn't go away, though, and the New York City we live in today is built directly on top of it all. 

The maps below offer a clear correlation between the island's natural state and our modern flood zones. On the left is the famous 1865 Viele map ("Sanitary & Topographical Map of the City and Island of New York") showing the water features and marshes of Manhattan. On the right is a screencap of the same section of Manhattan from the interactive NYC Flood Hazard Mapper, highlighting areas of current concern.

WHAT WE CAN DO: 
It's not all bad news. While New York City's Chief Climate Officer Rohit Aggarwala admits we're playing catchup with climate change, Edward Timbers of the NYC Department of Environmental Protection says that New York City "has the largest and most aggressive green infrastructure program in the nation."

Since Superstorm Sandy, the federal, New York State, and New York City governments have been working on solutions for our city to prepare for the increasing frequency of extreme weather events. The US Army Corp of Engineers has released a plan detailing the construction of movable sea gates at strategic bays and inlets around New York Harbor, as well as more than 30 miles of land-based levees and sea walls, and the rebuilding and reinforcing of natural wetlands and shorelines. Landscape ecology and hidden hydrology experts, in addition to Rohit Aggarwala and the Mayor's Office of Resiliency, are imagining solutions that range from turning basketball courts and gardens into water sinks to connecting sewers and drainage to local water features. Plans are being drafted to transform NYC into a "sponge city" through "the use of permeable asphalt, the construction of new canals and ponds, and the restoration of wetlands, which would not only ease waterlogging, but also improve the urban environment,” per Reuters.

WHAT IT MEANS FOR REAL ESTATE:
In addition to these macro plans, New York City is also leading the pack in predictive mapping of flood zones that take into account climate change over the course of the next several decades. These are novel takes on traditional floodplain maps, which are meant to define mortgage risks, set insurance rates, and establish building and land-use regulations. When all of the new maps are updated and released, homeowners may find themselves subject to mandatory flood insurance laws, while developers in flood-prone areas will likely be facing increased costs to meet new building codes. The updated maps will provide protection too, giving buyers and developers a much more accurate idea of the risks involved where they might be buying or building. 

One of the biggest questions facing the city when considering the recent floods is about the safety and legality of basement apartments. While better alert systems and public awareness can go a long way toward keeping tenants safe, the fact remains that many basement dwellings are at high risk for flash flooding. Pushes to legalize basement apartments to allow the city to better regulate them for safety have not been particularly successful so far. The Adams administration recently testified that out of 800 owners in East New York who expressed interest in a basement apartment pilot program, only five participated. It seems the costs and considerations required to make many basement dwellings safe and legal are beyond the ability of the landlords. This means that unregistered and potentially dangerous basement apartments are still being rented out, often to those with nowhere else to go.

If you're a homeowner or considering buying a home in New York City, there are many options available to keep yourself, your loved ones, and your home safe. A great place to start is this article from The City about making plans for evacuation, what to familiarize yourself with ahead of time, and the importance of a "go bag." There are also the Climate Resiliency Design Guidelines from the Mayor's Office of Climate and Environmental Justice, which provide recommendations for how to prepare your building or apartment for increased rainfall and high heat. Finally, you can check out your local risk levels in more detail with the NYC Flood Hazard Mapper, linked below.

NYC Flood Hazard Mapper

City Spotlight: Gansevoort Peninsula

Manhattan's only public beach is officially open! Designed through extensive community input, this new section of Hudson River Park isn't just the impressive 1,200 tons of sand—there's also a lounging area, a misting feature, a picnic area, and a boardwalk. If you're looking for something more cultural, the Peninsula is across from the Whitney Museum of American Art and contains its own art installation. Finally, you can see NYC's resiliency plans in action with the salt marsh, the first of its kind on the Manhattan side of the Hudson River.  The habitat is planted with native grasses and flora, and submerged reef balls and seeded oyster gabions will ensure a rich, sustainable ecosystem for years to come.

You can find more information here.

Price Adjustment: Now Asking $3,295,000

Upper East Side

360 East 88th Street, Unit 31C

4 BD   3.5 BA   $3,295,000

This newly renovated, sun-soaked home is a showstopper with stunning wraparound river and city views from southern, eastern, and northern exposures. Enjoy private outdoor space, a large eat-in kitchen, high ceilings, and an in-unit washer/dryer, all in a full-service luxury condo.

Leighton House is a full-service condominium with a 24-hour door attendant, concierge, and top-notch live-in resident manager. Building amenities include a windowed health club with double-height ceilings, yoga studio, saunas, a landscaped garden with a playground and basketball hoop, and a common laundry room on the second floor. Pets and investors are welcome. 

TriBeCa

Most Expensive Deal of the Day: 101 Leonard Street, Unit 4E

3 BD   3 BA   1,963 SF   $3,150,000

Thank you to the Real Deal for reporting that our deal at 101 Leonard Street, Unit 4E was the most expensive closing of the day.

The Leonard is one of NYC's most sought-after residences, located in trendy Tribeca. This luxury loft-like condo has incredible natural light, 10' ceilings, and nearly 2,000 sq ft of interior space.

Most Recent Mortgage Rates

Rates are from Citibank and are effective as of 10/11/2023. Rates are subject to change without notice.

Everyone’s mortgage needs are different. I have great relationships with mortgage brokers and loan officers from big banks and small banks who can help find the best loan for you. If you're looking for a lender you can trust, I'd love to help. Email me for more.

Rebecca's Resources

I'm an expert at successfully repositioning and selling homes that were previously listed without success. Click here for examples of how I have transformed listings to showcase a property's full potential, securing favorable deals where other agents could not. 

Find out how Compass Concierge can help you prepare your home before coming to market by fronting the costs of upgrading, renovating, and staging at no interest.

I'm born and raised in New York City. If you've got a question, I've got you covered. For recommendations on anything, from the best local tutors to fun free family activities, it's as simple as sending me an email.

Licensed Associate Real Estate Broker
M: 917.952.0414
rebecca.orbach@compass.com

Office: 212-913-9058

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.