Rising Interest Rates | Q3 2023 Manhattan Real Estate Market Report Analysis

In this episode, expert NYC real estate brokers John Gasdaska and Jonathan Conlon review Corcoran’s Q3 2023 Manhattan Real Estate Market Report and give their analysis.

Here’s the short version:

In Q3 2023, the number of contracts fell quarter-to-quarter and year-to-year, -27% and -15% respectively. This statistic continues to be skewed heavily by record high performance in 2022. Inventory numbers dropped as well, down -12% from Q2 2023 and -3 percent from Q3 2022, which can generally be attributed to seasonality. Days on market also fell -12% quarter-over-quarter, but rose +20% year-over-year as buyers grow more hesitant.

Rising interest rates in Q3 shook the confidence of both buyers that finance and buyers that pay cash. Rates of 7.49% as of 10/05/2023 have significantly impacted all of the key metrics that we track. We’ll get into the nuances of that influence in the detailed analysis of each metric.

But as always, there’s more to the story. Here’s our full Q3 2023 Manhattan Real Estate Market Report Analysis:

Q3 2023 Manhattan Real Estate Market Report Analysis

Contracts Signed

In Q3 2023, 2,266 contracts were signed in Manhattan, and contract activity declined at a slightly lower annual pace than closings. Contract activity declined annually for the sixth consecutive quarter, but the year-over-year decline was the smallest since Q2 2022.

Buyers have become increasingly hesitant as interest rates continue to climb with no sign of stopping. In our experience in the field, the prospect of higher monthly costs has caused buyers to become much more choosy than they have been in recent years.

While you may have been able to list an apartment in less than its best state last year, in our current market new listings must be above reproach in order to draw in offers.

Inventory

Inventory in Q3 2023 was the lowest of any Q3 since 2009, at just 6,480 active listings. Fewer than 3,800 apartments were listed this summer. This decline isn’t massive, however, only dropping -3% year-over-year and -12% quarter-over-quarter.

While this drop in listings is mostly due to typical seasonality, spring-to-summer drops in inventory pre-Covid were typically under -10%. We attribute the remainder of the decline to the rising interest rates, because many would-be sellers don’t want to walk away from the low interest rates they currently enjoy.

Days on Market & Negotiability Factor

Days on market settled at 109 in Q3 2023, a whopping -12% lower than Q2 2023, but +20% higher than Q3 2022. This statistic is a bit misleading this quarter, as most of the apartments that traded this quarter were mint condition or truly turnkey homes.

Many of the active listings in Manhattan which are in rougher shape, need more work, or just don’t have functional layouts will drastically alter the Days on Market the second they close. Some of these homes have been on the market as many as 300-400 days.

John & Jonathan’s Takeaways

Buyers: If you are able to afford the higher monthlies now, this can be a great time to get a fantastic deal on a piece of New York real estate.

Most of the listings on the market are sellers who need to sell (estates, people relocating for work, people divorcing, etc.) For the first time in a few years, negotiation is back on the table. As soon as interest rates drop, you can refinance your loan and lower your monthly payments.

Sellers: You can absolutely sell your home in this hesitant market – if you heed your broker’s advice.

While selling your New York City apartment isn’t as easy as it was in 2021/2022, it can be done. You must work with an experienced, knowledgeable broker who you can trust to realistically guide you through the current market – and listen to their guidance. We are your advocate and stewards, and protecting your financial interests is the core of what we do.

If you’ve read this far and you are in the market to buy or sell a Manhattan home, please reach out. We’d love the opportunity to be your trusted advisors.