Real Estate Sees a Slow Start in 2024, But Optimism Prevails

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By Serjik "Serj" Markarian, Licensed Real Estate Salesperson 

The Q1 2024 Manhattan Apartment Market Report was released this morning. At first glance, the data may seem grim, but it's worth examining the numbers more closely. The number of closings this past quarter was 2 percent below a year ago, marking the lowest total for the first quarter since 2009. This slow start to 2024 is likely a result of rising interest rates, which have kept many buyers on the sidelines.

Prices have also seen a downward trend, with the average resale price dipping 3 percent below the first quarter of 2023. Condos, in particular, experienced an 11 percent drop in their average resale price, leading the decline. These reductions could indicate that buyers are still hesitant to make purchases, possibly due to concerns about overpaying.

With high mortgage rates hindering sales activity, cash remains king. According to President and CEO of Miller Samuel Inc., Jonathan Miller, cash sales accounted for 63 percent of deals closed this past quarter, marking the third highest on record.

In the luxury market, prices saw an increase compared to the previous year, with the median sales price rising by 2.7 percent annually to $5.8 million. This marks the fourth consecutive quarter with a year-over-year price increase. Inventory, too, increased by 9 percent compared to the previous year and by 16.5 percent compared to the fourth quarter of 2023. 

Notably, the luxury sector has also claimed a larger slice of bidding wars in the last quarter, with almost 9 percent of homes trading above the asking price, compared to 5 percent in the overall market.

Despite a slow start to 2024, there are signs that things may be turning around in the near future. With inflation continuing to decline, mortgage rates most likely will follow in the months ahead. Furthermore, the economy is surpassing expectations and is expected to receive a boost from Federal Reserve rate cuts later this year. 

Stocks had an exceptional first quarter, with both the Dow and S&P 500 indexes reaching record highs. We also just learned that Wall Street paid $33.8 billion in cash bonuses for 2023. This news is particularly encouraging for both New York City's economy and the housing market. Brown Harris Stevens CEO Bess Freedman believes we should expect activity to increase in the coming months.

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