T
he traditional notion that summer is a slow time to sell New York City properties has been turned on its head. With the rise of two-income families and the pandemic, people are no longer tied to seasonal schedules. The super-rich can shop and buy whenever they want, while most sales involve individuals who live in the city part-time but are always looking for real estate.
The Olshan Luxury Market Report shows a significant drop in deals above $4 million between June and July/August, averaging 21 and 18 deals per week respectively. However, September has seen a bounce in activity, with weekly averages around 27 deals, driven by declining interest rates and a strong stock market. In contrast, sales below $4 million remained steady throughout the summer.
The third quarter's lack of new inventory is a major factor impacting the sales market. While new development continues to come online, it's at lower numbers than in previous years. Many available units are "clean-up" sales from buildings where most units have already been sold and inhabited. Higher interest rates and capital gains taxes on potential new purchases are deterring current apartment owners from downsizing.
Co-op sales are also being held back by the need for renovation, which is often costly and time-consuming. Buyers expect significant price discounts, while sellers are reluctant to give them. As a result, more people are opting for new construction, where they can move in with minimal fuss. However, some New Yorkers will always prefer prewar homes on iconic avenues like Park or Fifth.
The rental market remains fast-paced and expensive, with properties often renting within 72 hours of hitting the market. High interest rates have driven customers from the sales market, making renting a more viable option. The current generation of prospective property buyers has not seen real estate as a wealth-building investment in the same way older generations have.
Looking ahead to 2025, fourth-quarter sales are hard to predict, but it seems likely that the year will be stronger than the past three. As for prices, it may take time for them to return to pre-2016 levels, but there could be signs of increased prices in certain neighborhoods and properties.
