May – 2023 Market Update

The LevinKong Team hopes that you enjoyed the holiday weekend and the kickoff of summer. In New York City, we welcome the warm weather and all of the highly-anticipated outdoor activities synonymous with this season. We typically see a slowdown in the summer months, but with lower-than-normal inventory levels and a stunted beginning to our spring market, we expect to have an extended season, as buyers have been more active of late.

Generally, we are still in a low inventory environment. Manhattan is flat from this time last year and Brooklyn is down an additional 11% year-over-year. Buyer activity has shown noticeable improvement as pending sales ticked up 13% in Manhattan and 14.5% month-over-month in Brooklyn. This is one of the most segmented markets we have seen. Certain neighborhoods and property types are experiencing hyper-competition, while others are seeing supply growth and days on the market build.

The big winners are prime neighborhoods where supply has been anemic at best. In Manhattan, for instance, the Greenwich Village two-bedroom condo sub-market only has a total of seven currently available properties and nine in contract. This gives us a market pulse, the ratio of pending-to-active, of 1.29, which is up 92% year-over-year. Similarly, the Tribeca one-bedroom condo market has a market pulse of 1.03. In Brooklyn, the inventory-starved and sought-after Williamsburg three-bedroom condo sub-market has a total of eight currently available listings and eleven in contract. There, the market pulse is 1.38, which is up 77% from this time last year. In another of Brooklyn’s most coveted locales, Park Slope, only six three-bedroom condos are currently listed with eight in contract (market pulse of 1.33).

Higher interest rates are having an effect on all aspects of real estate, from lower inventory to less active demand. Another emerging implication is the growing number of all-cash transactions in the city. 60% of all Manhattan condo transactions and 40% in Brooklyn involve no financing. We haven’t seen this level of cash trades since our market peak from 2014-2017. At that time, cash was often the only way to get an offer considered in multiple-bid environments. Now, if a buyer is in a position to proceed without financing, it just makes fiscal sense. When financing was cheap, would-be cash buyers decided to deploy money elsewhere. Real estate is also a very safe place to park money, both as a hedge against inflation and as a way to see predictable future gains. Less predictable is the Federal Reserve, but it was “generally agreed” upon at last month’s meeting that the need for further rate hikes “had become less certain.” We hope that this translates to lower mortgage rates in the relatively near future, but only time will tell.

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. Please stay safe and let us know if we can answer any questions you may have about the market, or how best to navigate complicated decisions.