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Market Overview
Q3 2024 showed a generally resilient performance despite the typical market slowdowns that precede a presidential election and initial hesitancy due to anticipated changes in mortgage rates. Here’s a breakdown of the key market indicators:
- Total Sales: There were 2,694 recorded sales, representing a slight decrease of 1.8% compared to Q3 2023 and 2.3% compared to last quarter.
- Sales Volume: $5.2 billion in total sales volume, a 2.0% year-over-year decline.
- Median Sales Price: Increased by 2.2% year-over-year to $1,150,000.
- Average Sales Price: Remained virtually flat with a marginal decrease of 0.3% compared to the previous year.
- Inventory: Remained constrained, decreasing by 6.6% compared to Q3 2023 and 0.3% since the previous quarter.
Despite a modest dip in overall transactions, Manhattan’s market displayed pockets of robust growth, especially in the luxury sector, and demonstrated the classic NYC trend of price appreciation amid constrained inventory.
Impact of Interest Rates and Buyer Behavior
The third quarter witnessed a notable shift in mortgage rates, which fell to their lowest in 1.5 years towards the end of the period. The anticipation of these decreases led to slower buyer activity early in the quarter, followed by a surge in open house traffic and contract signings as rates dropped.
- Contracts Signed: Down by 1.8% year-over-year but showed a notable quarter-over-quarter drop of 27.6% as many buyers delayed entering the market in hopes of further rate drops.
- Luxury Market Activity: Strong performance was seen in high-end properties ($10M+), with contracts in the $10M-$20M range rising by 15.4% and those above $20M increasing by 16.7%.
Price Trends and Property Preferences
The third quarter exhibited price appreciation, primarily driven by limited supply and strong demand in select segments:
- Overall Median Price: A year-over-year increase of 13.6%.
- Luxury Segment: Saw the highest demand, with new developments and properties featuring modern amenities leading the charge.
- Price per Square Foot (PPSF): Fell slightly by 2.9% compared to Q3 2023, reflecting slight adjustments in affordability and seller flexibility.
- Discount Rates: Averaged around 7%, similar to previous quarters, indicating stable negotiation outcomes between buyers and sellers.
As expected, there was a clear trend favoring condos over co-ops. Condo contracts surged by 25.1% year-over-year, while co-op transactions decreased by 21.3%. The flexibility of condo ownership, with fewer board restrictions and access to more modern amenities, continues to fuel the preference toward condos.
Submarket Performance
Each Manhattan submarket exhibited unique characteristics in Q3 2024, reflecting varying dynamics across neighborhoods:
- Upper East Side and Upper West Side: These neighborhoods bucked the trend, with year-over-year increases in sales activity despite broader market slowdowns. Median prices remained stable, while luxury properties showed growth.
- Downtown: Experienced a decline in transaction volume but maintained relatively strong price points. The area’s high-end condo market performed well, with a notable median price increase of 10.5% year-over-year. On brand for the best area of the city 😉
- Midtown: Encountered a slower market with lower transaction volume, especially in co-ops. Median prices showed slight declines, signaling cautious buyer behavior amid economic uncertainty.
- Upper Manhattan: Displayed notable resilience, with median prices rising by 45.9% year-over-year. This area benefited from lower entry prices and rising interest from younger buyers and investors seeking value above all.
Inventory and Supply Constraints
Inventory remained a critical challenge, impacting prices and buyer behavior:
- Total Inventory: Slight decrease by 0.3% quarter-over-quarter, reinforcing the persistent issue of limited supply.
- New Listings: Dropped significantly by 39.1% quarter-over-quarter and 15.4% year-over-year, limiting choices for prospective buyers.
- Average Days on Market: Increased to 188 days, with 30% of properties taking more than 180 days to enter into contract, suggesting slower absorption rates, especially in certain segments.
Segment Analysis: Condos vs. Co-ops
The preference for condos over co-ops was a key theme throughout Q3 2024:
- Condos: With an average sales price of $2,620,498, condos saw a 25.1% year-over-year surge in contracts. Luxury condos ($3M+) also experienced double-digit growth in contracts signed.
- Co-ops: Despite a modest 1.7% price increase to $1,367,088, co-op transactions declined by 21.3%. Co-ops also spent more time on the market, reflecting weaker demand.
The flexibility of condo ownership, with fewer board restrictions and access to more modern amenities, continues to fuel the preference toward condos.
Ultra Luxury Market Insights
The ultra luxury market, specifically properties priced above $10 million, remained a strong performer:
- $10M-$20M Segment: Showed a 15.4% year-over-year increase in contract activity.
- $20M+ Segment: Recorded an even stronger 16.7% rise in activity, driven by generational wealth transfers, financial market gains, and the appeal of luxury new developments.
Inventory shortages continued to push high-end property prices upward, contributing to the average price increases seen in the market.
Emerging Trends and Future Outlook
Looking ahead, the Manhattan market’s trajectory will likely hinge on several key factors:
- Interest Rate Stability: The impact of falling mortgage rates is expected to solidify buyer confidence, particularly if they remain low through the end of the year.
- Inventory Trends: A persistent shortage of new listings will likely continue to drive prices upward, with buyers competing for a limited pool of available properties.
- Luxury Market Expansion: As high-net-worth individuals seek safe investments, the luxury sector is expected to maintain momentum, especially in new developments.
- Co-op Challenges: Co-ops may continue to face hurdles as buyers prioritize flexibility, convenience, and modern amenities, suggesting a sustained shift in market dynamics favoring condos.
Final Thoughts
Q3 2024 demonstrated the Manhattan real estate market’s resilience in the face of economic uncertainties. Despite a slight decline in sales volume and slower transaction pace, prices appreciated, driven by inventory constraints and robust demand in the luxury sector. The ongoing shift towards condos reflects evolving buyer preferences, and the market’s future hinges on mortgage rate movements, inventory trends, and macroeconomic conditions.
Manhattan remains a global real estate destination, with unique market dynamics that continue to evolve, making it a closely watched indicator of broader urban real estate trends in the United States. The coming quarters will determine whether the current momentum persists or if new factors alter the landscape further.
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