Luxury Real Estate Market Sees Resurgence in Manhattan
A Shift in Sentiment
After a period of hesitation, affluent buyers have returned to Manhattan’s luxury real estate market, driven by a combination of factors. The stock market’s recent gains and the outcome of the presidential election have boosted confidence, leading to an increase in luxury apartment sales.
Sales Surge 3.7%
According to a report by Douglas Elliman, luxury apartment sales in Manhattan, representing the top 10% of co-op and condo transactions, increased by 3.7% year-over-year in the fourth quarter. While the total number of luxury deals dropped by 10.7% compared to the previous quarter, this decline is attributed to a temporary dip in mortgage rates during that period.
Accepting the New Normal
Industry experts believe that buyers have “accepted the new normal” of higher interest rates. Leonard Steinberg of Compass notes that the recent surge in luxury sales suggests that affluent buyers are adapting to the current market conditions.
Market Volatility Persists
Despite the overall growth, the luxury market remained somewhat erratic throughout the fourth quarter. Weekly sales for homes priced at $4 million or more fluctuated between 19 and 39 contracts, with two of the most active weeks occurring during the fourth quarter.
Median Sales Prices Soar
The luxury Manhattan real estate market saw significant growth in the fourth quarter, with median sales prices surging 6.5% annually and 13.3% quarterly, reaching $6.525 million. This surge can be attributed to several factors, including tighter inventory and rising equities markets.
Inventory Dwindles
After three consecutive quarters of growth, the fourth quarter witnessed a significant drop in available homes. Manhattan’s luxury housing market saw an 8.1% annual and 18.1% quarterly decrease in available properties, driving listed inventory to its lowest fourth-quarter figure in nine years.
New Opportunities Emerge
The shift in the luxury real estate market presents new opportunities for investors. With lower interest rates, certain private market real estate investments are offering high-yield opportunities, providing access to a pool of short-term loans backed by residential real estate.
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