Manhattan Market Update: It Remains a Buyer’s Market

Elegran’s Leverage Indicator is a comprehensive market snapshot, informing us of whether current market conditions favor buyers or sellers. In other words, it tells us which of the two groups has more transactional leverage over the other.

Our leverage indicator is powered by four metrics:

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

Let’s examine these metrics individually before returning to the indicator and offering our verdict on the current state of the market.

Manhattan Supply

Like the years preceding it, Manhattan supply level is increasing on its way to the June peak. What does this mean for:

• BUYERS? They have more choices available.
• SELLERS? They face more competition with each other.

Manhattan Demand

Manhattan contract activity peaked in March and fell in April, which is typical of spring’s seasonality in real estate. What does this mean for:

• BUYERS? They face less competition with each other.
• SELLERS? There’s less activity among buyers.

Manhattan Median Price/SF

After trending downward slightly over the past few months, the median price per square foot in Manhattan increased in April. What does this mean for:

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

Manhattan Median Listing Discount

Listing discounts are still on the rise, so what does this mean for:

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

Elegran Leverage Indicator: Manhattan

Elegran’s Leverage Indicator informs us whether current market conditions favor buyers or sellers. In other words, it tells us which party has more transactional leverage over the other.

Looking at the graph below, this is indicated by the direction of trendlines. Our indicator also tells us about the relative strength of that leverage, indicated by the slopes in those trendlines.

In October 2022, the curve flattened, followed by a reversal in direction from January to March 2023.

However, the direction of the curve has clearly returned to that of a buyer’s market, and we now understand that there was a temporary reversal in spring due to the intense increase in buyer activity. In fact, looking back, we can see the same spring uptick in the curve every year. We had just missed it previously.

The Verdict

Three of the four metrics that power our leverage indicator favor buyers, so it’s not surprising that leverage is still in buyers’ hands. What does this mean for:

• BUYERS? They have the luxury of waiting for their ideal home prices.
• SELLERS? They feel a sense of urgency to transact quickly.

Rental Remarks

The median rent in Manhattan just hit a new high* and the average 30-yr JUMBO mortgage rate is 6.5%. It’s a “catch-22” for renters, as the rent vs. buy scale may feel equally punitive on both sides.

* March 2023 numbers, as April 2023 data is not yet available

Investor Insights

With NYC cap rates between 2.5 and 3.0%, plus mortgage rates at 6.5%, there’s simply no net income potential on leveraged investments. That said, however, with rents at all- time highs, opportunities exist for all-cash buyers.

On the sell side, a relatively strong US dollar affords foreign investors the opportunity to produce significant capital gains upon the sale of their asset, depending on their native currency.

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 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.

If you would like to chat about the most recent market activity, feel free to contact us at info@elegran.com or connect with one of our Advisors.