Is There Relief In Sight?

Last month, real estate talk in the Manhattan and Brooklyn markets centered around interest rates and whether they'd fall soon. That all came to fruition when the Fed met last month and finally lowered the interbank rate by 50 basis points — the first rate cut since March 2020!

The assumption has been that buyer pent-up demand has been escalating since rates started rising in Summer 2022, with the expectation that the Fed lowering rates would bring buyers back. So, has that happened??? The foot soldiers of the real estate industry — the real estate agents who pound the pavement every day working on behalf of their clients to get the best price possible — are, in fact, seeing an uptick in volume and overall transaction rates since the Sept. 18 rate cut. Looking ahead to October, is there any anecdotal evidence or water cooler chatter about busier open houses or more buyer inquiries, at the very least? The short answer is yes!

The number of listings that went into contract in September was up, driven mainly by mortgage interest rates that declined throughout the month, including after the Fed's 50-point reduction. Twenty-five percent more contracts were signed in Sept. 2024 than in Sept. 2023. That's great news since September is often one of the slowest months for listings to go into contract (contrary to popular belief), while October is generally the busiest month of the fall season for signed contracts.

Put another way, September is a “listing month“ in New York City, not a “signed contract” month. Historically, there's a spike in new listings after Labor Day, which starts to taper off later in the month. However, this September, the number of new listings was lower than last year. Buyers coming back into the market with zest and vigor because of lower rates, but with less inventory to choose from — this is the ideal seller's market recipe sellers have been waiting for over two years!

Don’t get me wrong, there are still hurdles to overcome. Real estate generally doesn't turn around overnight, and we still have the election and other geo-political situations to navigate through the rest of 2024. The challenges that might prevent a strong 2025 spring season are not completely clear at present. I’m not making a call that spring will see the return of a full-fledged seller's market — there are just too many unknown factors at play right now. That said, it is shaping up to be one of the stronger spring seasons the market has seen in quite some time. Maybe even going back to 2015-2016, the last time sellers enjoyed a brisk market in their favor.

But only time will tell. Inventory is still quite low compared to historical norms, and signed contract numbers are up YOY. If these two things continue on the same path, and the Fed continues to lower rates, as they are slated to do a few more times this year, things could be looking up for the New York City market – finally!