Manhattan's real estate market experienced renewed demand last quarter with signed contracts increasing by a staggering 26% and sales volume increasing 4% year-over-year. Closed sales had a median price decline of 5% driven by a drop in co-op prices as sellers became more negotiable, with listing discounts widening by 2%. However, buyers continue to pay a premium for renovated properties. The luxury and new development markets outperformed the broader market, with median prices increasing more than 6% and almost 20% respectively year-over-year.
Inventory remains tight, with a 4% decrease last quarter compared to the same time last year and January inventory 5-6% lower than the previous year. Sales volume and prices in 2025 could be significantly impacted by the "mortgage lock-in effect" as sellers with low mortgage rates remain hesitant to sell.
Constrained supply and rising demand may signal higher prices in 2025, fueled by pent-up buyer demand, record-breaking rents, strong Wall Street bonuses, and the return of foreign investors attracted by a strong U.S. dollar.
In today's market buyers must act quickly when considering well-priced, renovated properties. Meanwhile, sellers must price their homes in line with current market conditions. Overpriced listings often linger on the market, ultimately selling for less than they would have if priced correctly from the start.
With demand rising and confidence returning, Manhattan real estate appears to have shifted from recovery to growth - despite persistently high interest rates. The resilience of our local market is driven by its status as a global financial and cultural hub, home to world-renowned educational and medical institutions. As we head further into 2025 the momentum of the 4th quarter may very well carry into the upcoming busy season.
