Manhattan’s Real Estate Market Sees Rise in Mortgage Financing

A growing proportion of home seekers in Manhattan’s real estate market are utilizing mortgages to finance their purchases. This strategy has led to a rise in sales for the second consecutive quarter. As more buyers opt for mortgages, it impacts the dynamics of the city’s housing market. This trend indicates a shift in consumer behavior towards financing options. The evolving landscape may influence future pricing and inventory in Manhattan’s real estate.

Increased Transactions

According to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate, transactions involving co-ops and condos rose by 6.7% in the three months leading up to September, compared to the previous quarter. This uptick in activity is attributed to softened mortgage rates, coinciding with the Federal Reserve’s anticipated rate cut in September.

The increase in transactions shows a positive response to lower mortgage rates and economic optimism, according to wsj subscription.

Changing Buyer Behavior

“This indicates that lower rates and improved financial markets are attracting buyers who are leveraging loans for their purchases,” stated Jonathan Miller, president of Miller Samuel. He further explained that cash buyers are becoming less prevalent, suggesting a resurgence of those financing their homes.

Year-Over-Year Sales Decline

While Manhattan sales in the third quarter decreased compared to last year, the situation was described by Miller as “tepid.” However, declining borrowing costs are beginning to stimulate more transactions in the market. Newly signed contracts for Manhattan condos soared nearly 75% in September compared to the same month last year. Meanwhile, Brooklyn condo contracts also saw an increase of 12% during the same period. This trend indicates a potential recovery in the Manhattan and Brooklyn real estate markets.

Co-op Market Challenges

In the co-op sector of Manhattan, however, contracts for these units fell by 8% in September compared to the previous year. This decline stems from reduced buyer interest in more expensive listings. Brokerage Coldwell Banker Warburg noted that demand for co-ops has been negatively impacted by the “nearly universal requirement” for renovations.

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Renovation Costs Deterring Buyers

“Very few buyers have the time or patience to remodel an apartment,” the firm’s report indicated. Those who do expect substantial price reductions. Sellers are often reluctant to provide these price cuts. This reluctance has created a challenging environment for higher-priced co-ops. Consequently, the market remains tough for both buyers and sellers.

Affordable Co-ops in Demand

Conversely, the market appears more favorable for lower-priced co-ops. Contracts for Manhattan co-ops priced between $500,000 and just under $1 million surged. This surge reached 43% in September compared to the same period last year. According to Miller, this marks the largest annual growth in three years. The trend indicates increased demand for affordable housing options in the Manhattan market.

First-Time Buyers Entering the Market

Co-ops priced under $1 million in Brooklyn saw an even more significant rise, with contracts skyrocketing by 133% in September. Miller concluded that the surge in contracts under $1 million suggests first-time buyers are returning to the market, highlighting a positive trend amidst the fluctuating dynamics of Manhattan’s real estate market.

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