Market Update – August 2023

I hope you’re having a great summer!

As July comes to a close, it’s been a tale of two markets.  A seasonal slowdown combined with low supply and strong underlying demand has led to inconsistencies across the market.  Some properties do extremely well and others languish, with a host of factors responsible.  While the market has lost some of its steam, bidding wars are still quite common.  Despite summer distractions, buyers still come out of the woodwork to bid up certain properties that check their boxes.  As an example, I was just at an open house this past Sunday and there were at least 40 buying groups with a line to get in.  I expect this property will see multiple offers and end up over asking price.  Conversely, at other open houses there were only one or two attendees and I expect those properties will end up sitting on the market for a while.

For the week of July 17 – 23 there were 1739 Open Houses (fed from RLS), a 52% increase from the prior week. In our weekly open house survey across NYC for that week, the average number of attendees was 1.59 across all respondents.  Of our results, almost 66% of the OHs had 1 or less and 48% had no attendees.  100% of the no-shows were in Manhattan.  The highest OH attendance reported was a 2-bedroom for $875k in Prospect Heights which saw 27 groups.  Of our top 20 OHs, the average number of attendees was 4.65, a slight drop from the prior week’s 5.1. The most attended open houses were in Manhattan (65%), Brooklyn (25%) with 5% each for Queens & the Bronx.  The best attended OHs were a mix of all conditions from excellent to poor.  The average attendance for “1st OH” was 8.2 versus 1.1 for all the others.


In Brooklyn, supply of available properties stood at 3,219 units as of July 28th.  That represents a decline from the prior month and a faster rate of decline compared to same time last year. Contributing to the scarcity in supply is the interest rate penalty seller’s face when financing and the difficulty they face in finding a suitable new home. Demand has also dipped over the prior month, but the decline has been relatively modest. Part of that decline is cyclical following the spring market, however it’s interesting to note that the demand peak occurred in July of this year as opposed to late spring in prior years. Also, despite lower demand, an even lower level of supply helped support prices based on competition for properties. Even as we enter mid-summer, the Brooklyn market is relatively liquid and negotiating leverage still favors sellers in many cases. 


In Manhattan, the real estate market is experiencing a different dynamic. Supply in the borough has decreased by 8.2% from the previous month, with 6,732 properties available for sale as of July 28th. Supply this year had been tracking 2022, but has recently has dropped off more substantially in July. Demand in Manhattan had been on an upward trend into July but now also appears to have peaked as we head into August.   While demand has been relatively strong compared to earlier in the year, it is still significantly lower on a year over year basis as compared to 2022 and 2021. In an interesting side note, according to Jonathan Miller at Miller Samuel, the share of cash buyers in Manhattan rose for the third quarter in a row, reaching a record high of 64.5%. That’s up from 56.8% in the first quarter and 55.2% in the fourth quarter of 2022. 


Since we are entering a cyclical summer slowdown, we can expect to see less new supply over the next month or so. The market is bifurcated, with some properties selling quickly while others struggle to find buyers.  This is often due to property-specific attributes as well as the way it is both marketed and priced.

Cash buyers dominate the market In Manhattan, especially for new construction properties.  New construction may see an increase in supply over the next few years as development ramps up. However, tight credit conditions may limit financing options for certain developers and potential buyers. Additionally, with the Federal Reserve expected to hike interest rates again later in the year the possibility of rate cuts in 2023 is unlikely and more likely a mid/late 2024 event according to some experts.

Looking toward the end of the year, a number of economic conditions such as lower inflation, forward-looking mortgage rate stability/decline, higher economic growth, and low unemployment should have a positive effect on the market. While generally favorable, those conditions may not benefit everyone in the market equally. Persistent low supply and relatively high current mortgage rates, higher real estate prices, bidding wars, and affordability challenges will likely continue to constrain many would-be buyers.

Opportunities exist for certain segments of the market. Sellers of prime properties that are well-marketed, positioned, and priced are likely to find buyers and potential competition for their listing, particularly as we enter September/October. Also, cash buyers will continue to have an advantage when bidding on certain properties relative to those requiring financing.  Additionally, buyers willing to look at out-of-favor and stale listings may be able to pick up a decent discount to the original asking price.

Buckle your seatbelts!

If you have questions, need advice or would like assistance, please feel free to contact me.

That’s all for now. Enjoy the rest of your summer!