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May Day is behind us and Memorial Day is fast approaching—summer's nearly here! In this month's newsletter, we delve into the April 2024 market update, discuss the latest real estate news, and more. |
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| | The recurring theme over the past month and the start of 2024 remains consistent: elevated interest rates coupled with seller concerns about losing their lower mortgage rates translates to limited new inventory. In turn, well-priced properties in any borough can expect competitive offers with a median of just 58 days on the market. In Manhattan, where new inventory is scarce, median sales prices are on the rise, surging by 9.1% month-over-month to surpass $1.1M. Prices like these can limit the purchasing pool to buyers who are less or not at all reliant on financing. It's worth noting that though prices are high, there's room for negotiation: in March, a typical Manhattan home sold for just 94.3% of the initial asking price, lower than even the inventory-saturated market of March 2019. Brooklyn, meanwhile, saw its typical home sell in March 2024 for 96.5% of the initial asking price. That's reflective not only of the borough's comparatively lower median sales price (high for Brooklyn, but low for Manhattan) but also the sustained demand in its trendier neighborhoods. With even less new inventory than Manhattan, it seems clear that Brooklyn's market is poised to be the city's hottest going into the summer and fall. In fact, Q1 2024 data showed that about one in five Brooklyn properties sold above asking. Manhattan's data showed only one in ten. |
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| While many financial and real estate experts hoped to see the Federal Reserve already making cuts at this point in the year, it's almost certain that they'll hold interest rates steady at the June 12th meeting. Progress on disinflation has stalled so far in 2024, and the Fed is sticking to their stated goal of 2% before they consider cuts. There is, however, still hope that we could see anywhere from one to three decreases during the latter part of the year. Mortgage rates have dropped slightly, from 7.6% in October 2023 to 6.85% in April 2024, but for many prospective sellers and buyers, this decrease is not enough to justify the loss of better rates or the burden of higher monthly mortgage payments. With no imminent relief on interest rates keeping sales inventory relatively low, the rental markets in both Manhattan and Brooklyn continue to be competitive, with average rents often at or above their numbers this time last year. Given that the Rent Guidelines Board is proposing increases of 2-4.5% (one-year) and 4-6.5% (two-year), the rental market seems unlikely to cool until the Fed makes a move and the sales market shifts. See the full Compass April 2024 Rental Report here. Let's take a closer look at sales trends in Manhattan and Brooklyn. |
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| | | | | | | | Source: Compass April 2024 Manhattan Market Report |
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| | | | | | | | | | Source: Compass April 2024 Brooklyn Market Report |
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Deep Dive: The Housing Deal |
| Governor Kathy Hochul's recent legislative initiatives have sparked a wave of activity in New York City's real estate market, prompting a thorough reassessment of properties eligible for the 421a and 485x programs. Hochul's housing deal extended the completion deadline for projects vested under the expired 421a tax abatement by five years and introduced a new rental development initiative known as 485x. Previously, uncertainty loomed as deadlines for the 421a projects approached, leading to a decline in the value of properties eligible for the program. However, with the extension, these projects gain new life and investor confidence. Further, Hochul's introduction of the 485x program offers a fresh alternative, revitalizing interest in properties previously overlooked due to the expiration of 421a. As developers and investors eagerly analyze these changes, understanding the nuances of each program becomes essential. With three tiers of 485x and varying eligibility for the 2031 deadline among 421a options, comparing the two isn't straightforward. It's not a matter of simply declaring one better or worse than the other; there is a lot of variance. The 421a program, for instance, has different options (A, B, and C) that offer varying levels of benefits and affordability requirements. Option B mandates 30% of units be affordable, with 10% at 70% of the area median income (AMI) and 20% at 130% of AMI. Option A offers deeper affordability: 10% at 40% of AMI, 10% at 60% of AMI, and 5% at 130% of AMI. Developers favored Option C, requiring 30% of units to be affordable at 130% of AMI, allowing for higher rents than Options A and B, raising concerns about affordability. Hochul’s budget doesn't extend the deadline for Option C sites, worrying developers with limited time to complete construction. The introduction of wage requirements under 485x also adds a new dimension to the equation. Larger developments are now subject to tiered wage floors, impacting project feasibility and potentially influencing land prices. This aspect of the program requires careful consideration, as developers weigh the trade-offs between affordability requirements and construction costs. Developers are conducting thorough evaluations of 421a-eligible sites versus those under the 485x program since they cannot opt for both. It's important to note that the extension only applies to projects that had already secured 421a benefits. Comparing 421a and 485x on affordability metrics, 421a projects receive higher rents. However, there's a key difference: 421a mandates rent stabilization for all units during the tax benefit period, whereas 485x applies it only to affordable units. Consequently, 485x buildings could generate higher revenue over time if market-rate rent increases outpace rent-stabilized rent increases. Still, some experts predict that 421a projects eligible for extension will command higher prices than 485x sites for larger projects, as the market is likely to prioritize the impact of prevailing wage expenses under 485x over the potential revenue from market-rate units. Others, however, believe the market will place the greatest value on the smallest tier of sites eligible for 485x. These projects, ranging from six to 99 units, are not subject to wage requirements. Paired with non-stabilized, market-rate rents for 80% of the units, this setup enables more profitable projects, making them appealing to developers. |
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City Spotlight: Rooftop Cinema Club |
| Experience summer cinema in style at Rooftop Cinema Club, located in Midtown Manhattan. Starting May 1, enjoy classic movies under the stars with vegan popcorn, craft cocktails, and more. From When Harry Met Sally to Dirty Dancing, the lineup offers something for everyone, including special events for Star Wars Day and Pride Month. New additions like Saturday Cereal Club and Mimosas & Muffins Sundays add extra excitement. With breathtaking skyline views and comfortable seating options, including premium lounge chairs, Rooftop Cinema Club promises a memorable experience. Tickets range from $12 to $29 per person, so grab yours now for a night to remember in the heart of Manhattan. |
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Rented for 20% Above List Price |
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| | | | 2 BD 2 BA 1,400 SF $9,995 |
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Located in the heart of the Lower East Side, this expansive full-floor home offers unparalleled luxury living with exclusive elevator access, a private balcony, an in-unit washer/dryer, and a smart home system that controls surround sound, lighting, thermostat, blinds, and video intercom via your smartphone. Floor-to-ceiling windows showcase expansive city views while illuminating the open chef's kitchen, which is equipped with premium Miele appliances, Carrara marble countertops, and bespoke millwork. |
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| | 2 BD 1 BA 850 SF $849,000 |
| With approximately 850 square feet of living space, this inviting home boasts east-facing windows that bathe the interior in sunshine throughout the day, offers abundant closet space, the ability to install a washer/dryer, and an incredibly low-maintenance, all in a full-service coop ideally positioned west of Third Avenue. |
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| | | 251 East 32nd Street, Unit 5J |
| 1 BD 1 BA 750 SF $599,000 |
| This recently renovated home is sunny, spacious, remarkably quiet, and boasts ample closet and storage space. Featuring wide-plank white oak floors and charming views of townhouse gardens through expansive windows, the apartment exudes a bright and cheerful atmosphere. |
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| | 1 BD 1 BA 900 SF $899,000 |
| Just off Park Avenue, this large and pin-drop quiet one-bedroom with home office offers the perfect mix of prewar charm and sleek modernism, a storage unit that transfers with the apartment, and the ability to install washer/dryer! |
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| | | | | 1 BD 1 BA 750 SF $599,000 |
| This sunny, spacious, renovated home has open city views from southern and western exposures. The apartment features hardwood floors, an open kitchen with stainless steel appliances, and six large closets, including two California closets. |
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| Perfect for an investor or end user. Tenant in place paying $7,750/month. Tenant can vacate with 30 days' notice. Contact me for details. Perched on the 30th floor with breathtaking views from three different exposures, this expansive home has been fully renovated, and not a single detail has been overlooked. Enjoy 75 square feet of private outdoor space, an open chef’s kitchen with top-of-the-line appliances and a large island, and laundry just down the hall, all in a full-service condo. |
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Most Recent Mortgage Rates |
| | Rates are from Citibank and are effective as of 05/06/2024. 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. |
| | | 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 outdoor summer fun to the best kids' day camps, it's as simple as sending me an email. |
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| | Licensed Associate Real Estate Broker |
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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. |
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