Manhattan Market Update: From Buyer’s Market to Neutral Market

Elegran’s Leverage Indicator is a comprehensive market snapshot, providing insight on who has most transactional leverage. It tells us who the market currently favors – Buyers? or Sellers?

Four metrics power it:

• SUPPLY
• DEMAND
• MEDIAN PRICE/SF
• MEDIAN LISTING DISCOUNT

Between March and October 2022, the chart indicates a firmly established buyer's market. However, since then, conflicting metrics have caused the market to shift sideways, resulting in a "neutral" market where neither buyers nor sellers have a significant advantage. 

Overall, the Manhattan market is discerning but liquid. 

Now, let's delve into each of the four metrics individually to gain a better understanding of why the market has reached this neutral state and what implications it holds for buyers and sellers.

Manhattan Supply

Like the years preceding, the Manhattan supply level peaked in June and is now decreasing on its way to the late August or early September trough.  What does this mean for:

• BUYERS?  Fewer opportunities.
• SELLERS?  Less competition.

Manhattan Demand

After the expected surge in contract activity in March and again in May, Manhattan demand retreated somewhat in June.  What does this mean for:

• BUYERS?  Less competition.
• SELLERS?  Less activity.

Manhattan Median Price/SF

The median price per square foot has been trending slightly downward since April.  What does this mean for:

• BUYERS?  Price/SF is moving in their favor.
• SELLERS?  Price/SF is moving against their interest.

Manhattan Median Listing Discount

Median listing discount has fallen sharply over the past two months, so what does this mean for:

• BUYERS?  Discounts are moving against their interest.
• SELLERS?  Discounts are moving in their favor.

Elegran | Forbes Global Properties Leverage Indicator: Manhattan 

The current market control in Manhattan is a matter of significance for both buyers and sellers. Elegran | Forbes Global Properties' Leverage Indicator serves as an invaluable tool for understanding market dynamics and determining which party holds control.

Between March and October 2022, the Leverage Indicator graph clearly shows a buyer's market firmly established in Manhattan. However, conflicting metrics since then have led to a sideways shift, resulting in a current state of market neutrality. This means neither buyers nor sellers currently have a significant advantage.

The direction of the curve on the Leverage Indicator reflects market positioning, while the slope indicates the relative strength of leverage. At present, the slope is relatively level, indicating a neutral market. A negative slope would indicate a buyer's market, while a positive slope would indicate a seller's market.

It remains uncertain which direction the market will shift and whether buyers or sellers will come out on top. Only time will reveal the outcome as we better understand the future market trajectory.

 Rental Remarks

The median rent in Manhattan just hit a new high*, and the average 30-yr JUMBO mortgage rate is 7.09%.  It’s a “catch-22” for renters, as the rent versus buy scale may feel equally punitive on both sides.

* May 2023 numbers, as June 2023 data is not yet available

Investor Insights

With Manhattan cap rates between 2.5 - 3.0% and mortgage rates at 7.09%, there is simply no net income potential on leveraged investments.  However, with rents at all-time highs, opportunities exist for all-cash buyers.

On the sell side, a relatively strong USD affords foreign investors, depending on their native currency, the opportunity to realize significant capital gains upon selling their assets.

On the buy side, the weakening dollar creates opportunities for foreigners to purchase Manhattan real estate and lock in its notorious stability and potential for price appreciation.  

About Us

Elegran’s mission is to ‘humanize the world of real estate’ through a client-first and a thoughtful technology philosophy. A distinguished Forbes Global Properties member for New York City’s five boroughs and winner of the Most Innovative Brokerage Award from Inman, Elegran’s talented team of agents delivers client-centered service, resulting in eight times more sales volume sold per agent than the industry average.