August – 2023 Market Update

The LevinKong Team sends our best wishes for an enjoyable Labor Day weekend. As we approach the end of summer, New Yorkers are soaking up the remaining perks of this sun-drenched season. For some, that means packing a picnic to enjoy the relaxation and sprawling landscape of Central Park or the Brooklyn Waterfront; for others, it’s heading out east to savor those final magical moments at the beach. 

This is typically a slow season in NYC real estate. However, after a weaker start to the year, we actually saw activity pick up and culminate with a busy August. Pending sales in Manhattan saw a 9% bounce this month from July and 15% from the prior year. In Brooklyn, where good inventory is tough to come by, signed contracts ticked up 8% from the prior month and 9% from last August. Total inventory in Brooklyn dropped an additional 12% from the already meager supply from this time last year. Demand is high, and we’ve seen our Brooklyn listings trade at record levels, in multiple bid scenarios, for double-digit percent over our asking prices.

As we’ve been pointing out for several months, in Manhattan there are neighborhoods and property types that are performing very well and others that are not. The biggest trend is for renovated, move-in-ready apartments to garner lots of attention, while properties in need of work are not faring as well. Blue-chip locations and quality buildings are outperforming less desirable locations and lower-quality buildings. We believe this trend will stick around for a while, and we will start seeing a deeper price divide favoring quality in general. Analyzing average price-per-square-foot by neighborhood is a less useful tool, and it will be more necessary than ever to dig deeper into micro-markets.

In this high-interest rate environment, we are seeing less inventory hit the market, as would-be sellers are hesitant to trade their low-interest rates for significantly higher ones. We expect this to continue into the fall, which should keep prices relatively stable. The Fed isn’t giving up on its battle against inflation just yet. Higher interest rates are keeping many would-be-buyers sidelined. Where purchasing was attainable for many first-time homebuyers with lower interest rates, many are presently opting to remain in their rentals, biding their time until there is some interest rate relief. This is putting pressure on the rental market, and landlords are certainly benefiting. Cash buyers are claiming a record share of NYC’s housing market, and empty nesters moving back to the city or buying second homes are currently a significant portion of the NYC buyer pool. This same liquid-rich group is also helping their young professional children purchase without the use of financing. 

With proper guidance, there are many ways to take advantage of this dynamic and intricate market. More than ever, a data-driven, research-based approach rooted in decades of experience will equip our clients to thrive in this environment. Enjoy the rest of your summer, have a fantastic Labor Day weekend, and please let us know if we can answer any questions you may have about the market or how best to navigate complicated decisions.