Frederick Peters
President Emeritus
A powerful crosscurrent of forces buffeted New York’s real estate market during the final quarter of 2024. A highly polarizing election, wavering interest rates, and limited choices made for an uneven and often contradictory sales landscape. Only the rental market, which had surged throughout the first three quarters of the year, showed signs of slowing to a more seasonally appropriate pace. The inconsistent forces of these final months of 2024 are mirrored in the Olshan Luxury Market Report, which documents weekly sales of Manhattan properties priced at $4 million and above.
Weekly sales in Q4 2024 have ranged from a low of 19 contracts per week to a high of 39. Two of the year’s three best weeks have occurred during this quarter; 34 deals for $4 million or more during the second week of December and 39 during the first full week of November, the same week as the election. As was evident with the rise in the stock market, the Republican victory soothed financial nerves, at least for now, by clearly signaling the return of a period of reduced regulation and taxation for the affluent.
In the $4 million and up category, condos continue to outsell co-ops at a rate of at least 3 to 1. Many factors go into creating this disparity. Condominiums now appear in every neighborhood in Manhattan, as well as being increasingly evident in northern Brooklyn. Many offer terrific and up-to-date amenities: gyms, playrooms, pools, conference rooms, and entertaining spaces with catering kitchens. The apartments have high ceilings, spacious rooms, and layouts that mimic the best features of prewar apartment living. And the buyer can move right in!
Even the once less desirable locations, like Broadway and Amsterdam Avenue on the West Side and Third and Second Avenues on the East, don’t put buyers off. Properties in all those locations now receive record prices. And in Manhattan now, for the first time, the borough-wide total inventory, always previously dominated by co-ops, has approached parity between co-op and condo apartments. While almost all the apartments sold for less than $1 million are co-ops (as condos cost more), the problems buyers perceive with that form of ownership remain a damper on their prices. Many of the co-op apartments, which have been around far longer than most of the condominiums, require renovation, which New Yorkers seem increasingly reluctant to do. Supply chain issues, cost overruns, and delays make renovation an unpalatable option for many buyers, in spite of the fact that these unrenovated apartments offer great value and, in the case of the prewar buildings, unparalleled solidity of construction.
Interestingly, today’s Gen X and Y buyers eschew the status markers of their parents’ generation. Park and Fifth Avenues no longer hold the allure they once did, especially as the most expensive zip code in Manhattan today belongs to Tribeca, and the overall flight of younger people from Manhattan into Brooklyn continues unabated. While buyers above 59th Street on both the East and West Sides still enjoy proximity to (and sometimes views of) Central Park and many of the city’s best private schools, these neighborhoods, by and large, just no longer seem cool.
Throughout most of the year, the rental markets in both Manhattan and Brooklyn have been unstoppable. Overbidding, much more than in the sales market, has been commonplace, with many tenants losing multiple apartments before being able to secure one. During the 4th quarter, the pace has slowed a little, and thus prices have moderated slightly. This month, not EVERYTHING has been rented on the first day!
Looking into 2025, the market may be ready for a modest uptick in the latter part of the year. Prices have stabilized, and by and large, sellers are either entering the market at more realistic numbers or revising the overly ambitious prices at which they began. The pace of sales, while still erratic from market to market and month to month, has grown stronger over the second half of the year. New York City real estate (indeed, most real estate) transcends politics. Everyone needs a home.
