February 2024 Market Overview

In recent months, mortgage interest rates have shown a promising downward trend, dropping from their previous highs of around 8% to below 7%, with indications of potentially reaching 6%. While this may not seem like a significant decrease, its impact on the real estate market has been notable. Rather than witnessing a surge of financed buyers eager to secure a 7% mortgage, we have observed a rise in cash buyers making a push, and seizing what may be the final chance to benefit from high-rate discounts before buyers with financing re-enter the market.

2023 saw many potential homebuyers pause their search and opt to stay put or rent due to prevailing fears and uncertainties. As rates continue to decrease and economic conditions become clearer, a considerable number of these individuals are expected to join those already active in the market. In the first five weeks of 2024 we have seen less supply come online compared to the first five weeks of the last five years and we’ve seen contract activity (demand) up compared to 2019, 2020 and 2023. Those who act promptly may look back with satisfaction at having made their move before the influx of buyers, thereby avoiding reduced options, decreased price flexibility, heightened competition, but of course, lower rates too. It's an opportune time for potential homebuyers to consider making their move and capitalizing on these evolving market conditions. Sellers should be preparing for a busy Spring market.

Ultra Luxury Market ($10M+ Properties): More Than 1,500 Homes in the U.S. Sold for $10 Million and up in 2023. Manhattan led the country with the most ultra-luxury deals for the second year straight. There were 256  $10 million-plus transactions, which totaled $4.92 billion. Compass Luxury Division’s 2023 Ultra-Luxury Report is now live.  This publication showcases data on all $10M+ transactions over the last four years, inclusive of all brokerages. The full report can be found here.

Luxury Market ($4M+ Properties): 22 contracts were signed last week at $4M and above, 3 fewer than the previous week. Condos outsold coops 15-6 and 1 townhouse was in the mix. COMPASS Agents across the US sold 3,916 properties priced at $4 million and more in 2023.  March, May, June and August had the highest volume. The top states for $4 million-plus sales were California, New York, Florida and Texas, all above 200 sales.

Local Law 97: New York City's landmark building emissions law, launched this month, aims to drastically reduce greenhouse gas emissions from large buildings. 

The city’s Goal:

• Reduce emissions by 40% by 2030 and 80% by 2050 in buildings larger than 25,000 square feet.
• Achieve net-zero emissions by 2050 through additional measures.

Fines: Buildings that don't comply face significant financial penalties.

As NYC's building stock is aging (median age of apartments is 90 years!), many condo and coop boards are preparing for necessary upgrades to meet these ambitious goals. We expect most buildings to require assessments and retrofits over the next five years. Estimated costs based on early reports we are seeing in the market suggest an average of $2 million per building, translating to roughly $20,000 per apartment in a 100-unit building.

Mortgage Rates: Mortgage rates in the US are expected to decline this year, stoking optimism about the real estate market, according to the latest Bloomberg Markets Live Pulse survey. The rate on a 30-year, fixed mortgage is expected to fall to 5.5% by year end, according to the median from 236 respondents. That’d be down more than a full percentage point from its current level of about 6.69%, and the first annual decline after three straight years of gains.

Rental Market: The average listing price in Manhattan increased 3% from December to January and now sits at $5,276. All segments of the market saw price increases with the exception of three bedroom apartments, which saw a 2% price decrease. Given that we are in the middle of winter, a concession heavy market, these figures have to be taken with a grain of salt. The majority of current listings are either offering one (or more) month free and / or have the owner paying the commission. These incentives can affect a landlord’s bottom line by 8%+.

Compass Network: Our team currently covers Manhattan, Brooklyn, Westchester and Queens, but Compass is the largest independent real estate brokerage in the U.S. We have real estate offices throughout the U.S., largely focused in major metro areas but in an increasing number of cities and states, with more than 300 offices in 72 markets.

Please do not hesitate to reach out for your Manhattan and real estate needs in other markets. 

We thank you for your continued support and hope you have a great February!