New York City’s Top Market Predictions & Factors Heading Into 2024

As a global city with a melting pot of cultures, backgrounds, and beliefs, the current Israel-Hamas war could have lasting impacts on New York City’s housing market, according to Kobi Lahav, Senior Managing Director of Living New York. As residents on both sides of the conflict reevaluate their political, social, and economic alliances, this movement “could have longer-term implications for New York City mayoral races and electoral votes in 2028,” said Lahav, ultimately influencing local legislative outcomes.

As always, it is recommended to read the latest news from reliable sources to get the most up-to-date and accurate information on the current status of the conflict. Additionally, given the rapid evolution of the situation in the region, new developments may have occurred since this article was published.

For the past year or so, surges in interest rates by the Federal Reserve have driven up national mortgage rates, limiting homebuyer budgets and tying up supply in the marketplace. Sellers are still hoping for peak market prices. Still, Lahav remains optimistic that, come the New Year, “inventory will grow as people come to terms with the new reality of U.S. housing prices,” and the city’s rental rates “will see a leveling off . . . and even a trend down as we hit peak rental prices in the middle of 2023.”

Recently, the Federal Reserve announced that there will be three strategic cuts in interest rates across 2024, aiming to eventually lower mortgage rates. This reduction comes as a welcome reprieve from the surges of the previous year, which had limited homebuyer budgets and tied up supply in the marketplace.

Seth Levin, an agent with Keller Williams in New York City, suggests that for those looking to score a deal, it’s advisable to make a purchase before interest rates decline. By taking advantage of any current price dips and strategically refinancing when rates come down, buyers can secure not only a good price but also a favorable mortgage rate. He added, “When interest rates do come down meaningfully, both buyers and sellers will enter the market,” heating up competition all around.

To be prepared for potential mortgage rate drops, Kunal Khemlani, an agent with The Corcoran Group in New York City, recommends all prospective buyers get mortgage pre-approval letters in the New Year. He noted, “While it’s impossible to time the market correctly, you can be prepared.” He added, “Understand what you can afford on a monthly payment, including HOAs and real estate taxes; this will help you target the correct properties and be taken seriously by sellers.”

As for sellers in the 2024 marketplace, Douglas Wagner, Director of Brokerage Services at BOND New York, noted that “sellers are generally digging in on their listed prices.” He further explained, “For the market to build momentum going into the New Year, sellers will need to recognize that only price improvements will inspire buyers to engage.”

On a more local level, the Metropolitan Transportation Authority (MTA) in New York City has recently received nearly $3.5 billion in federal funding to extend the city’s Q Subway line northward to Harlem’s East 125th Street. “The Q expansion is already bringing many new developments in the East Harlem area,” said Lucy Wu, an agent with BOND New York. With this new channel of transportation and increased development, there is an investment opportunity for those looking to capitalize on an appreciating market.

“The average sale price per square foot in all of Manhattan is $1,362, versus East Harlem at $840 per square foot, a 38% difference in price value,” said Wu. And East Harlem real estate “could see a possible 10% increase in appreciation over the next decade as the new subway line reaches completion,” added Wu.

While sales price is always a crucial factor for any real estate consumer, it holds a unique significance for high-end consumers in one of the world’s most elite housing markets. In this context, luxury transcends mere price. Therefore, the luxury New York City real estate market consistently establishes its own trends and carries its own set of forecasts.

“High net worth individuals are really looking into where to invest their money with interest rates so high, they can still pay cash for a trophy asset,” said Nicole Gary, an agent with Keller Williams in New York City. “High net worth buyers buy something because it’s a good investment, their friends are buying in the building, they love the views, they need a place to display their art collection, entertain friends,” she added. “The under $4M buyer does not think about or make decisions based upon these factors.”

As for the luxury market in 2024, Gary foresees it faring better than the average market, driven by renewed interest from foreign investors who still view New York City as a safe investment and a continued epicenter of culture, fashion, finance, technology, hospitality, art, and more.

According to The Corcoran Group’s most recent luxury Manhattan market report, November 2023 saw 48 transactions above $5 million, up 12% from a year ago, marking a strong end to the year for the upper end of the market. Meanwhile, the top locations for ultra-high-net-worth buyers appear to be creeping northward, with the majority of New York City’s priciest real estate sales for 2023 bordering Central Park, all eclipsing the $50 million mark.

In the latter half of 2023, some bombshell antitrust class-action lawsuits gained steam, uncovering illegal activity across some of the nation’s top brokerages, professional associations, and multiple listing services. These activities were related to collusion on practices concerning real estate agent commissions. That being said, New York City holds a unique position, as the greater city does not operate on a traditional Multiple Listing Service (MLS) and will most likely have a slow roll-out of any new industry standards.

As we head into 2024, Douglas Wagner noted, “While hundreds of firms share listings and commission through their local professional association, commission rates are negotiated by individual brokers and their firms, and they are not set as a standard by the industry.” 

Regarding the potential impact of legal changes on brokerages, he added, “It will be a priority for agents to be able to define their value on both sides of a transaction, and buyer agents especially will demonstrate the tremendous amount of preparation and labor that goes into conducting a single deal.”

As more “copycat” lawsuits emerge nationwide, the news surrounding these changes for industry professionals is likely to continue into 2024, and consumers should keep a watchful eye on how the outcomes of these lawsuits impact their overall costs when transacting real estate.

Brooklyn, one of New York City’s five boroughs, stands at the forefront of the dynamic market slated for 2024. Renowned for its diverse neighborhoods, cultural richness, and evolving urban fabric, the borough’s real estate market is poised for a fascinating year ahead.

A key indicator of the Brooklyn market may be the exceptionally high material and labor costs observed over the past year, ultimately deterring many buyers from considering properties that require upgrades. 

“Many buyers were frustrated with how little inventory was available that didn’t need some sort of renovation,” said Christophe Tedjasukmana, an agent with The Corcoran Group in Brooklyn. As for 2024, Tedjasukmana foresees that buyers will continue to reject properties in need of renovation and instead favor “smartly priced, turn-key re-sales in the Brooklyn neighborhoods of Kensington and Windsor Terrace, as well as farther north in Williamsburg and Greenpoint.”

However, Melissa Leifer, an agent with Keller Williams in New York City, relayed that buyers are open to projects, specifically in areas where the supply of desirable townhomes is limited, such as Cobble Hill, Prospects Heights, and Park Slope. She noted that buyers are more willing to take on renovations in these locales as long as the home is priced accordingly.

Switching to the impact of mortgage rate fluctuations on Brooklyn’s market, there appears to be a geographical divide. “Mortgage rates have not affected northern Brooklyn as they have in other areas,” said Liefer. “There is a plethora of Bay Ridge co-op apartments available, for example, and yet in Prospect Heights, there is barely anything available,” she added. “What I’m seeing is people in northern Brooklyn are able to put more money down, which lowers their monthly payment.”

Ultimately, with an array of housing options, ranging from historic brownstones to modern high-rises, Brooklyn’s real estate market presents a unique tapestry that reflects the city’s vibrant spirit. The borough’s proximity to Manhattan, various subway lines, ample green spaces, and waterfront areas will continue to make it a desirable market in 2024.