Five Critical Factors For a Fantastic 2024

New York City is the heart and focal point of so many global influences, including real estate, finance, tech, the arts, and so much more. So, what needs to happen for Manhattan’s real estate market to have a rebound year after the lows of 2023? Here’s my view on the key factors that will help the Manhattan market improve next year.

#1 Interest Rates:

With the Federal Reserve signaling lower rates in 2024, the overall real estate market in New York City has already seen a slight uptick in buyer interest, particularly for newer listings. The higher interest rates of the last year affected the overall market, but they impacted properties listed at $2 million or under most of all. The one element with the most potential to help the Manhattan and Brooklyn real estate markets rebound will be whether the Fed actually lowers the federal funds rate and banks follow suit, passing the savings on to buyers in the form of lower mortgage rates. So far, mortgage rates have dipped to their lowest levels since May purely on the strength of three successive Fed rate hike pauses.

#2 The Strength of The General Economy:

The S&P 500 is often seen as the barometer for the general economy. It also provides insight into the health and direction of the New York City real estate market. Simply put, the S&P is a bellwether for our local real estate market. With the Fed hinting at lower interest rates, Wall Street has had a series of rebounds, making up all that had been lost in 2023 in about 24 hours! If Wall Street is happy, it tends to have a trickle-down effect on the local real estate economy. If Wall Street has a banner year, so will Manhattan’s real estate market. As of this newsletter, it seems the Fed’s moves over the last year have started to rein in inflation while avoiding a recession. Bringing all this together would be a win-win for the Manhattan real estate market in 2024.

#3 The 2024 Presidential Election:

In typical presidential election years, agents try to get most business done in Q1 and Q2 before voting takes place. Not much has changed in that respect this year. However, with all that's happening in this particular election, even Q1 or Q2 could be a crap shoot. This may or may not happen, but it could be possible that when Q3 rolls around, buyers could enter wait-and-see mode, possibly re-emerging in Q4 2024 through Spring 2025. But who knows? This is probably the hot-button issue that is hardest to predict. With two former presidents and known entities running against each other, most people can’t put their finger on how the election is going to affect the real estate market this year.

#4 Geopolitical Unrest/Wars:

Global unrest causes ripples in global economies. One can see the unrest in the Middle East/Israel and Ukraine, and its subsequent economic impact, extending through next year. And you can never know where the next conflict will unfold and how it will affect the global or local economies. It’s something to watch out for, for sure. But it’s not an issue we can necessarily foresee. Unrest can unfold anywhere at any time, especially as the world seems to be moving towards more tribal situations.

#5 The Ongoing Return-to-the-Office Dynamics:

If you look around the skyline of Manhattan, new office buildings are rising everywhere, including the massive new Chase JP Morgan Bank building on Park Avenue. According to several sources, many Manhattan workers are back in the office at least part of the time, with return-to-work levels reaching almost 80% of January 2020 levels as of June 2023. If you look around Midtown at lunchtime or after work, it honestly feels more like 110% of pre-pandemic levels. Even more workers are expected to return to the office in 2024, which could substantially impact both the rental and sales markets. So, we're watching this indicator like a hawk.

Looking Ahead:

Manhattan and the overall New York City real estate market stand at a crossroads. Movement in either direction is contingent on several macro and micro factors, all vying for influence. Interest rates, global economies and localized events all will play their part in how 2024 pans out. Today, the NYC real estate market’s trajectory is being shaped by many elements. While challenges persist, we are watching the resilience and dynamism of a Manhattan real estate market seemingly on the verge of bouncing back.