The Pulse - Manhattan Luxury Market 8/6/24

The summer slowdown has arrived with a big bang in the luxury Manhattan real estate market for properties priced at $4 million and over. Last week, contract numbers dropped by 46%! Welcome to this edition of The Pulse, your weekly resource for market information, insights, and advice on navigating the complex Manhattan luxury market.

Market Overview

Contract Numbers Dive: Last week, only 13 contracts were signed, marking a significant 46% drop from the previous week's 24 contracts. However, July saw a 5% increase in contract numbers compared to last July. New listings also saw a dramatic decrease, with only 12 properties entering the market—a 59% drop from the week before.

No Alarm Needed: Contract numbers and new listings often dive in August. It's hard to say if this low contract activity will follow the typical August pattern, given the buzz about potential for Fed rate cuts next month. The 30-year fixed rate recently plummeted to 6.375%, down 0.125 percentage points from the day prior.

Condos Lead: Condos continue to lead the market, holding a 62% share last week.

Downtown: Downtown maintained its top position with a 39% market share, while the Upper East Side followed closely with a 31% share. Additionally, 69 properties were taken off the market, representing a 44% increase from the previous week. It's typical for many listings to be removed in August after an unsuccessful spring selling season.

Interesting Opportunities

Among the notable transactions last week were two Trump Tower condos at 721 Fifth Avenue.

• Trump Tower Discounts: For buyers seeking deals in luxury midtown condos, Trump Tower should be seriously considered. According to Marketproof, the average discount for the past 10 sales has been 15%, with an average price of $1,575 per square foot over the past two years.
• Central Park Views: Last week's two Trump Tower condos, both with Central Park views went into contract. They were priced at $2,080 per square foot and $2,787 per square foot, respectively, both in excellent condition on very high floors.
• Olympic Tower Value: Another older luxury midtown condo offering excellent value is the iconic Olympic Tower, known for its exceptional services.

Market Pulse and Performance

The current Market Pulse is at 1.3, up 0.5 points from the past month and 0.4 points from last year. The market is in neutral territory, favoring neither buyers nor sellers.

Key Factors:

• Contract Decline: Although contract numbers declined last week, the significant drop in new listings and the high number of properties coming off the market led to a stronger Market Pulse.
• Poor Performance in High-End Market: New developments and the $10 million and over market performed poorly, with just one contract over $10 million and two contracts in new developments.

Top 2 Contracts: See all 13 contracts

#1- 10 E 82 Townhouse: Asking $11.5M, 6 bedrooms, 5.5 baths, 5,737 sq ft. First time on the market in decades, needing renovation. It was on the market for 246 days, with a $1M price reduction.

#2 - 17 E 63 #Floor3/4 duplex - co-op: Asking $8.5M, 3 bedrooms, 3 baths, 4,155 sq ft, $2.045 per square foot.

Macro-Economic News

The financial markets experienced the worst three-day slide since June 2022 due to global concerns over a slowing US economy. Job growth slowed sharply in July, leading investors to worry that the Fed has moved too slowly and will need to catch up by cutting rates.

Market Recovery: The market recovered some today, and the Fed will likely make statements to calm investors' anxiety. The silver lining is that mortgage rates are likely to fall soon, potentially boosting the housing market.

Advice for Sellers and Buyers

Sellers

The market has slowed down significantly last week, but we were fortunate to have an active season lasting into July. If you decide to remain on the market in August, you'll face less competition than after Labor Day when the fall season begins. However, many buyers may wait until September, anticipating rate cuts.

We could see a very active fall season due to impending Fed rate cuts, influencing buyers and sellers who have been waiting since July 2022. For sellers taking their property off the market this month and planning to relist in September, it's an excellent time to thoroughly analyze the property. Consider these four issues: price, property presentation, product, and a poorly performing location.

Buyers

New listings have decreased significantly, so you may need to wait until September for more options. September could bring a surge in listings due to the possibility of multiple rate cuts this year. However, keep an eye on market recovery and possible mortgage rate drops following recent global financial market drops.

Conclusion

While the luxury Manhattan market experienced a significant slowdown last week, the upcoming potential rate cuts by the Fed and the expected increase in listings this fall could present new opportunities for both buyers and sellers.

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Until next week, may all your real estate goals and dreams become a realty!