During the fourth quarter of 2023, several of the trends that held the residential real estate market back for much of the year—high mortgage rates, inflation, and low inventory—had begun to ease. Mortgage rates have edged down in the last few weeks.
In December, the 30-year fixed mortgage rate fell below 7% for the first time since August. The Federal Reserve signaled that it expects to make 3 interest rate cuts this year, which will lower the cost of borrowing even further, but certainly not the sub-3% rates we saw during the pandemic.
Of all Manhattan buyers, 67.9% paid all cash for their home in the fourth quarter, a 17.6% year-over-year jump, mainly due to the surge in mortgage rates. In turn, mortgage-based sales fell 32.5%. Historically, cash buyers have made up 40%-50% of the Manhattan housing market. As mortgage rates continue to fall in 2024, we can expect an increase in mortgage-based transactions and inventory as more sellers become motivated to sell.
If you’re considering selling in 2024, do not look to 2024 as a year of buoyant price increases. Properly priced inventory is vital in this climate. Optimistic pricing yields no results.
If you’re considering buying in 2024, act fast, as we expect growing buyer competition. There will be pockets of real opportunity, most notably in co-ops, properties needing renovation, or more peripheral neighborhoods. 2024 will be an exciting year for the NYC real estate market!
As always, we remain bullish on NYC.
