Today In Real Estate

I hope you had a fantastic holiday season and that the new year is off to a great start! We're truly grateful for all our clients and friends who helped make 2024 our second-best year ever. Even with interest rates remaining high, our team was able to increase our closed sales volume by over 20% last year, and we are off to a very productive start to 2025.

I am pleased to share our December and Q4 2024 Market Recap. After almost 2 years of a suppressed market, the end of the year brought three straight months of above-average contract activity. It seems that buyers and sellers have finally made peace with the current rate environment, and as of now momentum seems to be building for an even better 2025.

Manhattan Snapshot

While the first half of 2024 failed to meet expectations, the market roared to life in the Fall. Despite lagging inventory, with notably little new development hitting the market, contracts signed were up significantly over last year, and December contracts outpaced even historical averages.

In terms of sales volume, condos outpaced coops, and the ultra-luxury ($20M+) market jumped 58% from last year indicating strong demand for Manhattan's most exclusive properties. On the other end of the spectrum, the most attainable properties (<$500K) also increased dramatcially, up 21% from last year.

Prices were a significant factor in this rebound; average and median price per square foot each fell year-over-year, although these declines were smaller than in the previous year, suggesting that prices have stabilized. Also significant was the continuing dominance of all-cash deals as well as a general acceptance of interest rate levels for those financing. After years of waiting for lower rates, many buyers finally resigned themselves to a new normal.

Some notable trends across Manhattan:

• All Manhattan submarkets saw an increase in closings other than FiDi/Battery Park this quarter. Midtown saw the greatest year-over-year increase (+8%) in sales; however because this was driven by a significant uptick in coop sales, Midtown also saw the greatest decline in prices year-over-year.

  
  

• Median sale price on the Upper East Side remained even with this time last year, although price per square foot rose significantly due to an uptick in new development closings. Conversely, median and average sale prices on the Upper West Side went down, due to an increase in coop closings and a decrease in ultra-luxury sales along the southwest corner of Central Park.

  
  

• Downtown inventory was at its lowest Q4 level since 2015, while closings rose 3% annually — primarily due to an increase in resale condo and coop closings with new development sales down. This pushed median prices down while average prices were up, buoyed by a few ultra-luxury closings.

Overall, open house traffic trended down over the course of Q4, mirroring a trend we saw in 2023. That said, open house traffic in Q4 2024 was, on average, slightly stronger than the corresponding weekends of 2023, with a quarterly average of 1.54 visitors in 2024 vs. 1.4 in 2023. The most popular areas for open house visitors was consistently the Upper West and Upper East Sides as well as central and western areas downtown (West Village, Nomad, Tribeca, Soho, etc).

Healthy increases in sales and contract activity at the end of the year bode well for 2025, which has already hit the ground running.

Brooklyn Snapshot

As we've come to expect, inventory was the main limiting factor in the Brooklyn market during Q4. While overall inventory increased by double digits, this was driven by new development inventory which nearly tripled, while coop and house inventory declined. Overall, the 1,427 active listings in Q4 was 24% below the ten-year inventory average for fourth quarters.

Despite this, signed contracts rose both quarterly and annually, and prices (median sale price and PPSF) also increased.

Notable trends across Brooklyn:

• While total inventory was up year-over-year borough-wide, it was down in three of the eight submarkets, with substantial decreases in Brooklyn Heights/Cobble Hill/Dumbo/Downtown Brooklyn (-22%), Bed-Stuy/Crown Heights/PLG (-13%). This drove prices higher in these areas.

  
  

• As we’ve come to expect, South Brooklyn had the largest annual percentage gain in listed inventory — resale condo listings there jumped 65% and new development listings nearly tripled compared to 2023 -- however, closings fell by double digits, adding to the surplus in this area.

  
  

• After South Brooklyn, Park Slope and Gowanus saw the most significant year-over-year increase in resale inventory which kept prices there even, with average PPSF increasing slightly.

Brooklyn open house traffic remained fairly strong throughout the 4th quarter, with a slight lull in the middle followed by an interesting uptick during the final two weeks of the year. Compared to 2023, open house visitor averages grew from 3.32 to 3.67.

2024 Mortgage Rate Recap

2024 saw some unexpected ups and downs in mortgage rates. We started off the year in the low 6%’s with the industry expecting quick and frequent rate cuts by the Fed. But unfortunately that wasn’t the case and the expected start date for cuts kept being pushed back. These dashed expectations caused mortgage rates to rise, peaking in May in the low 7%’s -- a full percent higher than we had seen just four months earlier.

Although the Fed still hadn’t cut rates at their July meeting, it became clear that the cuts were imminent. Mortgage rates reacted immediately in anticipation, plunging by 0.625% in August. Despite some back and forth, rates fell to their lowest point in mid-September. However, despite subsequent rate cuts in the Fed's September, November, and December meetings, mortgage rates rose about a full percent through the end of the year as lingering concerns about inflation -- rather than a collective sigh of relief -- has the industry skeptical of aggressive cuts and the Fed has already signaled that it anticipates only two modest rate cuts in 2025.

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

Real Estate News

Office landlords and tenants signed a total of 10.2M SF of leases in Manhattan in the final three months of 2024, according to new Colliers data, setting the stage for continued uptake in the New Year. Total leasing in the fourth quarter was 18.3% higher than the previous quarter and the strongest quarterly volume seen in Manhattan's office market since Q4 2019.

(BISNOW)

NYC’s residential market closed 2024 on a high note; Manhattan notched contract activity gains in December, while new listings in Brooklyn doubled.

(THEREALDEAL)

The most positive development in the [national] housing market over 2024 has been the increase in active housing inventory, which is approaching the levels seen in 2019. Although those 2019 levels represent a five-decade low before COVID-19, the market was still functioning better than it did from 2020 to 2023. Today the market is in a much better position if mortgage rates fall toward 6%, something that wasn’t the case before.

(HOUSINGWIRE)

New York City’s long-awaited congestion pricing plan has begun. Most drivers will now be charged $9 a day to enter a designated “congestion relief zone,” which runs from 60th Street to the southern tip of Manhattan. The tolls are expected to help generate $15 billion for critical repairs and upgrades to subways, buses and commuter rail lines.

(THE NY TIMES)

CPI (Consumer Price Index) rose 2.9% in December compared to the year before, but a measure of underlying inflation was more encouraging.

(THE NY TIMES)

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– Jason & Mike, Buyers of an Hell's Kitchen Co-op