2024 Q2 New York City Real Estate Market Report
Overview:
The New York City real estate market in Q2 2024 was marked by cooling demand and rising interest rates. While the market remained active, growth slowed compared to previous quarters. The sales market experienced price fluctuations as buyer affordability tightened, while the rental market continued to hit record highs due to limited inventory.
Sales Market Highlights:
- Price Trends:
- Manhattan:
- The median sale price for condos in Manhattan in Q2 was $1.22 million, down 1.8% year-over-year but remaining stable compared to Q1.
- Co-op prices saw a 2.5% year-over-year decline, with the median co-op sale price at $830,000.
- The average price per square foot for condos was $1,750, reflecting a 2% quarterly drop.
- Brooklyn:
- Brooklyn condos saw a slight dip, with median prices declining by 1% to $950,000.
- Co-ops held steady, with no significant price change, maintaining a median price of $710,000.
- Sales Volume:
- Manhattan:
- There were 2,200 transactions in Q2, a 5% decline year-over-year, as higher mortgage rates deterred some buyers.
- Brooklyn:
- Sales activity in Brooklyn slowed, with 1,650 transactions, down 4% year-over-year, due to affordability concerns and tight inventory in popular neighborhoods like Williamsburg and Fort Greene.
- Inventory Trends:
- Manhattan:
- Active listings in Manhattan increased by 10%, totaling around 7,500 units, giving buyers more options but not enough to offset rising borrowing costs.
- Brooklyn:
- Brooklyn saw a 7% increase in inventory, with 6,200 active listings, reflecting slower absorption rates.
- Luxury Market Softness:
- The luxury market saw weaker activity in Q2. Sales of homes priced over $5 million declined by 10% year-over-year, with the Upper East Side and SoHo experiencing fewer transactions in the top tier.
- The average sale price in the luxury market dropped to $7.2 million, down from $8 million in Q2 2023.
- Buyer Demographics:
- Domestic buyers accounted for a larger share of transactions, as international buyers pulled back due to global economic uncertainty.
- First-time buyers represented about 10% of transactions, a slight increase as some buyers took advantage of price reductions in certain areas.
Rental Market Highlights:
- Record-High Rents:
- The rental market in Q2 remained competitive, with Manhattan median rents reaching $5,050/month, a 4% year-over-year increase.
- Brooklyn’s rental market also set new records, with the median rent hitting $3,950/month, a 5% rise compared to Q2 2023.
- High Demand for Larger Units:
- Larger units (2-3 bedrooms) were in particularly high demand due to remote work trends, leading to average 2-bedroom rents of $6,200/month in Manhattan and $4,900/month in Brooklyn.
- Low Vacancy Rates:
- The vacancy rate in Manhattan remained low at 1.4%, while Brooklyn had a 1.8% vacancy rate, reflecting tight supply.
- Landlord Incentives:
- About 20% of new leases offered concessions, such as one month free, down from 35% in Q1, as landlords capitalized on high demand.
New Developments and Construction:
- Project Deliveries:
- New condo projects were completed in Hudson Yards, Long Island City, and Downtown Brooklyn, adding over 1,200 new units to the market. These developments attracted both buyers and renters seeking modern amenities.
- Construction Delays:
- Supply chain issues and rising construction costs delayed several projects, pushing completion dates into 2025. Despite the delays, developers remained optimistic about long-term demand.
Future Forecast:
- Sales Market Outlook (Q3 2024):
- The sales market is expected to stabilize in Q3, with price increases of 1% to 2% anticipated as buyers adjust to higher interest rates.
- Inventory growth will likely continue, giving buyers more options and putting downward pressure on prices in certain neighborhoods.
- Luxury market activity is expected to rebound slightly as international buyers return to the market and sellers adjust pricing expectations.
- Rental Market Outlook (Q3 2024):
- Rents are forecasted to rise by another 2% to 3% in Q3 as demand continues to outpace supply.
- The vacancy rate is expected to remain low, with minimal relief for renters until new rental buildings come online in late 2024 or early 2025.
- Market Drivers:
- Rising interest rates will continue to shape buyer behavior, with all-cash buyers and those in the luxury market less affected.
- The international buyer segment is expected to strengthen as global economic conditions stabilize, with renewed interest in prime Manhattan properties.
Key Numbers Recap:
- Median sale price (Manhattan condos): $1.22 million (-1.8% YoY)
- Manhattan median rent: $5,050/month (+4% YoY)
- Brooklyn median rent: $3,950/month (+5% YoY)
- Vacancy rate (Manhattan): 1.4%
- Sales volume (Manhattan): 2,200 transactions (-5% YoY)
- Luxury market sales: $7.2 million (average sale price, down 10% YoY)
Conclusion:
In Q2 2024, the New York City real estate market faced challenges from rising interest rates and affordability concerns, resulting in slower price growth and reduced sales volume. However, the rental market remained red-hot, with record-high rents and low vacancy rates. Looking ahead, the market is expected to stabilize in Q3, with moderate growth in sales and continued strength in the rental sector. The luxury market may see renewed interest as pricing adjusts and international buyers return.
