Frederick Peters
President Emeritus
For the New York real estate market, the first quarter came in like a lion and mostly just kept on roaring. New York, a reliably Democratic city, entered the year uncertain about how the re-election of President Donald Trump would impact our market and markets in general. While many businesspeople and finance professionals expected a more pro-business environment, that has not exactly taken place. But even as the tariffs have come and gone and come again, and our mayor has been co-opted into co-operating with the immigration crackdown to obtain a get-out-of-jail-free card, the residential real estate markets in Manhattan and Brooklyn have remained stronger than they have been since 2021, even as the securities markets have taken their big hit during the month of March.
As the market sees an average of around 30 deals a week in the $4 million and up range, mostly condominiums, the essential balance of properties sold remains constant from 2024. With renovations becoming ever more expensive and time-consuming, the appeal of new condominiums remains powerful. (A side note on renovations: 15 years ago, non-starchitect architects were quoting $250 to $300 per foot for nice, upper-middle-end renovations; now those same architects tell me you really cannot get that same job done for less than $700 per foot.) The need for renovation bifurcates the market. While move-in ready and well-proportioned properties are commanding a substantial premium, sometimes selling as high as they did a decade ago, homes needing work continue to linger on the market, often requiring substantial price reductions before they trade.
Another trend that continues to impact the market is the considerable difference in market dynamics between neighborhoods. The tiny new condominiums that sell well on the Lower East Side would have no place on the Upper West Side. Similarly, the spacious three bedrooms which trade so well in Tribeca and north of 59th Street would be much more challenging to sell in the East Village. Sales in Harlem, which for many years became a hip destination for younger New Yorkers and those seeking large intact brownstones like the ones in Sugar Hill, have suffered sales declines in each of the previous two years. At the same time, the Lower East Side increasingly hosts a population of pricey restaurants, little boutiques, and buyers and renters younger than 40 whose great-grandparents might have lived in tenements on those same blocks.
Inventory remains tight throughout the market for move-in ready properties, while older condos and co-ops needing work still offer outstanding value to buyers willing to undertake the time and trouble involved in a renovation. And these days many would-be renters end up as buyers because the rental market in NYC is still so competitive and expensive. While agents are seeing competitive bidding on renovated sales properties, it has not become the norm; rental units, on the other hand, tend to disappear in almost no time, often within 24 or 48 hours of being listed.
Overall, the first quarter showed a real estate market in gradual recovery despite the uncertainty and economic headwinds created by the unpredictable new Federal administration. In spite of several marquee sales at surprisingly high prices, the market still shows more signs of stabilization than of increase. And while the considerable year-over-year gains of the past don’t seem likely to return any time soon, a stable real estate market offers opportunity for careful buyers to make home choices that hold their value and serve them well for many years to come.
