This is Corey Cohen, founder of The Roebling Group, and here's a glimpse into last week's real estate news.
Manhattan's Luxury Real Estate
Overview of 2023:
While the national real estate market faced challenges in 2023, Manhattan's luxury segment remained resilient. Despite a second consecutive year of declining transactions and sales volume, the numbers still outperformed much of the 2010s. Approximately 1,200 homes priced at $4 million or more were contracted, a slight decrease from 2022 but the highest since 2015.
Total sales volume for the year approached $10 billion, placing it in the middle of the past decade's annual volume totals. The average sale prices for condos, co-ops, and townhouses rose, signaling the influence of limited supply in sustaining prices.
The scarcity of listings contributed to the market's stability, showcasing Manhattan's enduring desirability and the resilience of wealthy buyers against mortgage rate hikes. This stands in contrast to the national trend, where existing home sales were projected to hit their lowest since at least 2012.
What Lies Ahead:
Looking forward, there is optimism mixed with caution. The Federal Reserve's commitment to lowering interest rates in 2024 could potentially stimulate sales. However, real estate executives, after two years of declining sales, are adopting a wait-and-see approach.
CEOs in the industry express varying sentiments. Bess Freedman, Brown Harris Stevens CEO, remains "skeptical" but "cautiously optimistic" about market improvements. Analyst Jonathan Miller is doubtful about a "flood" of inventory, while Steven James, CEO of Berkshire Hathaway HomeServices, believes rates falling under 6 percent could "make a huge difference."
Reflecting on 2023's Mortgage Trends
Year-End Mortgage Trends:
The conclusion of 2023 saw a less-than-rosy picture for mortgage demand, despite a notable drop in interest rates during December. The Mortgage Bankers Association reported a 9.4% decline in total application volume for the week ending Dec. 29, compared to the previous two weeks.
The average rate on the 30-year fixed closed the year at 6.76%, lower than two weeks prior but higher than the preceding week. Although still below the mid-October peak of 8%, the recent decline in rates, influenced by slowing inflation and potential Federal Reserve rate cuts, has yet to stimulate a significant uptick in home purchase applications.
Refinancing vs. Home Purchase Applications:
While applications for refinancing ended the year 15% higher than the same period last year, those seeking mortgages for home purchases experienced a 12% decline. Many homeowners, having already taken advantage of record-low rates in the first two years of the pandemic, now find themselves contending with limited supply and escalating home prices.
Challenges and Optimism for 2024:
The pressing question as we enter 2024 is whether rates, currently in the 6% range, will remain stable and if that stability will incentivize potential sellers to enter the market. Builders, a bright spot in the industry, can contribute to supply, but new homes come with a price premium.
Mortgage rates, starting the week slightly higher, are still within the 6% range. The ongoing momentum will likely be shaped by incoming economic data, including the Federal Reserve meeting minutes and the government's monthly employment report. The Headlines
The Real Deal's analysis of the busiest architecture firms in New York City. Despite the challenges faced by the office market, some firms stood out for their resilience and adaptability.
Here's a concise summary of the recent developments regarding the retail portion of the Williamsburgh Savings Bank Tower. The retail segment of the iconic Williamsburgh Savings Bank Tower is set to go into foreclosure auction within the next 90 days.
Real Estate Weekly has quietly ceased operations, with its website offline for months and the print edition fizzling out. The publisher, Chris Hagedorn, is open to offers for its assets.
Argentic Investment Management, the debt fund that once housed the original Barneys department store, has sold the property at 115 7th Avenue for $22 million. This sale represents less than half of what was paid for the 40,000-square-foot building in 2014.
Governor Kathy Hochul signed a bill last month that broadens the definition of fraud in rent overcharge cases. Recent chapter amendments reflect her insistence on eliminating some landlord-feared provisions.
Have a question about buying or selling real estate in NYC? We've had a number of requests for home equity reports which we've been putting together for clients this past week. Please feel free to book an appointment with me here for a consultation. Best,
The Roebling Group