As 2023 drew to a close, a remarkable trend emerged in Manhattan's real estate market. Despite mortgage rates reaching their highest levels in nearly a quarter-century, the prices of condos and co-ops in Manhattan experienced a notable uptick.
This was the first such increase in over a year, signaling a resilience in the housing market that defied broader economic trends. In an unexpected twist, many buyers seemed undeterred by the daunting mortgage rates, with a record number engaging in all-cash transactions.
The last three months of the year saw the median sale price of all co-ops and condos in Manhattan soar to $1,156,391, a 5.1% rise from the previous year. This marked the first year-over-year increase since the third quarter of 2022, as reported by Douglas Elliman and Miller Samuel Real Estate Appraisers and Consultants.
Market Resilience Amidst Fluctuating Inventory
Despite the drop in sales and inventory, the housing market in Manhattan has shown remarkable tenacity. Since the pandemic, housing inventory in Manhattan has fallen by 3.5%, yet prices have not only remained high but have surged by 15.8% from the fourth quarter of 2019.
According to Jonathan Miller, president, and CEO of Miller Samuel, this trend indicates a steady rise in prices, largely due to the Federal Reserve's aggressive stance on mortgage rates to combat inflation. Interestingly, December witnessed an increase in newly signed contracts for co-ops and condos in Manhattan.
This uptick came as mortgage rates began to decline sharply, marking a positive shift in the market's trajectory. This surge in signed contracts was further bolstered by an increase in inventory across all property types, the quickest rate seen since March 2022.
The end of October saw the average rate for a 30-year, fixed-rate mortgage at 7.79%, per Freddie Mac. However, this rate has been on a downward trend for nine consecutive weeks, standing at 6.61% recently. This decrease in mortgage rates, prompted by the Federal Reserve's policy meeting decisions, has instilled a sense of optimism in the market.
Miller suggests that the future growth in sales will likely come from more people financing purchases due to the declining rates.