Market Report

Dear friends and clients,

We hope you are having a productive and healthy fall. When mortgage rates dipped in mid-August, the market immediately picked up and there was a palpable shift in momentum going into Labor Day. While the last few weeks have simmered down, we have not seen seen a marked lull in activity as we might expect for an election year. The mood for the season -- at least in the NYC residential real estate world -- continues to be one of optimism for relief after a long slog.

Lately we've been getting a lot of questions about buyer commissions. While this is a developing story, I want to share a few takeaways with you today. Sellers may still offer to pay buyer's agents -- in fact I have yet to see a broker-represented listing in Manhattan that doesn't include an offer of compensation to the buyer-side. What a seller pays their listing agent or offers to the buyer's agent is still negotiable, as it always has been. Buyer agreements -- signed between a buyer and their agent specifying the duties of the agent and providing a fee for the service -- are not mandatory in NYC. While some agents have found these agreements to be a useful tool with buyers, I believe more clarity is needed, and I expect we will have more guidance soon. The NYC brokerage community has adopted some changes this year, but in my view, these have not impacted the essential functions of agents on either side of the transaction. If you've been wondering about any of this, please reach out -- I'd love to discuss with you.

Manhattan Market Update

Early September started with a bang after a sleepy summer, and the weekend after Labor Day saw the highest levels of open house traffic in 2+ years, while signed contracts in both August and September rose to meet historical averages for the first time since June of 2022. Given that the summer was extremely slow until rates dipped in mid-August, the quarterly data is less useful and we will focus instead on September figures below.

As expected seasonally, new listings rose sharply in September (+1,915), but both new and total inventory trailed behind last September. After feverish open house attendance the weekend after Labor Day, this waned as the month progressed, a trend mirroring what we saw last year. After a burst of signed contracts at the end of August, September contracts were down (though still higher than last year), but we expect an uptick in October reflecting deals underway in September.

Prices held steady, with median sale price essentially even (+0.8%) with August figures, and up a very modest 1.9% compared to September of last year. Looking at the quarter as a whole, price per square foot fell for the 6th consecutive quarter, but closed sale prices ticked up due to a shift in transactions toward the higher end of the market. There were three other noteworthy trends we observed in Q3:

• The Upper East Side emerged as the strongest submarket with resale closings up 16% despite shrinking inventory and low levels of new development. Downtown sales declined for the 9th consecutive quarter driven by plummeting new development inventory.
• The luxury market was a bright spot despite limited inventory. Contracts signed for homes in the $10-20 million range increased by 15.4% year-over-year, while contracts for homes over $20 million saw an even larger (16.7%) uptick.
• There was the growing preference for condos over co-ops. Condo contracts jumped 25.1% from last year, while co-op transactions fell 21.3%. This shift reflected buyers' increasing demand for amenities and the fewer restrictions typically associated with co-op board approvals.

Brooklyn Market Update

Once again Brooklyn was strong despite higher prices, lack of inventory, and fewer new development projects. While there was an influx of new listings in September, inventory remains woefully below historical averages and 6% below last year. Contract activity in September surpassed last year, but was below historical averages both for the month and quarter.

September closed sale prices continued to tick upwards, with median sale price up 3.9% and average sale price up 8.6% compared to September of last year.

Especially in the most in-demand areas, new inventory was absorbed quickly and often over-asking. Due to scarce townhouse inventory in the Q3, townhouse prices rose 11% and there were 26% more closings over $3M than we saw last year.

The now-familiar tale of two cities (Manhattan v Brooklyn) continued throughout Q3 and into September, as illustrated by a comparison of open house attendance. In Brooklyn open house activity since the start of September has consistently averaged over 4.5 visitors; Manhattan has averaged less than 2. Even throughout the slower summer market, Brooklyn open houses saw at least 2 visitors on average while Manhattan averages dipped below 1.

Mortgage Rate Update

For the first time since March 16, 2020, the Federal Reserve lowered the Fed Funds Rate at their September 2024 meeting. While the Federal Reserve had been discussing a rate cut since December, it became clear in July that the cut would come in September. Mortgage rates proactively fell in anticipation of the September rate cut, which came in at a half-point. Mortgage rates are now at their lowest point since Spring 2023. More recent reports (CPI and Jobs) have signaled a more resilient economy than expected, which could mean a more conservative path to rate reductions going forward, which has caused some fluctuations in mortgage rates the last few weeks.