All-cash transactions usually account for about half of all co-op and condo apartment sales in Manhattan. With interest rates rising during 2023, that number rose to 56.7% in the third quarter, then jumped to an all-time high of 67.9% in the fourth quarter, according to the latest Elliman Report.
But interest rates plateaued in December, as the Federal Reserve began to bring inflation under control, and they're expected to drop during 2024 — which, in turn, is expected to inject life into the city's largely sluggish real estate market. Indeed, according to separate Douglas Elliman report, co-op and condo sales were up in December for only the second time since 2021, when the market was reeling from the COVID-19 pandemic and the onset of inflation and rising interest rates.
In its NYC Market Report, Coldwell Banker Warburg states: "During the fourth quarter of 2023, several of the trends that have held the residential real estate market back for much of the year have begun to ease. Inflation seems to be cooling. The Fed did not raise the prime rate at its last meeting, and mortgage rates have begun a gradual descent."
Another factor is in play, the report adds: "Most importantly, many sellers who clung throughout the earlier part of the year to stubbornly high prices for their properties have concluded that they must compromise if they wish to sell. This marketplace is not kind to mispriced property."
There is some good news. "Co-op sales increased annually (by 2%) for the first time in six quarters," the Elliman report states, "while the condo median sales price edged higher year over year for the first time in five quarters."
What's in store for 2024? "We project that the easing of mortgage costs will continue, although they will not sink close to the rates many consumers became accustomed to during the decade that ended in 2021," the Coldwell Banker Warburg report states. "Hopefully, there will be an increase in properly priced inventory as serious sellers continue to recognize that optimistic pricing yields no results."
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