From Time Magazine:

Jonathan Miller, the CEO of Miller Samuel Inc, has reported a record-high number of all-cash home sales in Manhattan, indicating a record number of wealthy buyers paying cash for real estate. Cash sales have soared to 67.9% of all sales in Manhattan, a significant increase from the average of 40-50% over past years. Mortgage rates at an 8% peak have led to a 32.5% decline in mortgage-based sales. Capital Economics forecasts that mortgage rates won’t fall below 6% until the end of 2025. Cash sales could pull down the overall market share as an uptick in mortgage-related sales is expected to contribute the largest growth in sales. Cash sales give ultrawealthy buyers more bargaining power, making it more difficult for new homebuyers, contributing to an issue of first-time homebuyer affordability. Home sales prices in Manhattan have increased for the first time in more than a year, with the median home sales price at $1.15 million and the average sales price over $2 million. The U.S. housing market’s lock-in effect has limited housing supply in Manhattan, as homeowners with low mortgage rates are reluctant to sell their homes. This led to a decline in listing inventory. It’s predicted that prices will modestly rise in 2024 due to limited supply. The New York City real estate market overall was slow in 2023, with large properties taking months to sell due to aspirational pricing by sellers.

Cash sales of homes in Manhattan have surged, making up 67.9% of all purchases in the fourth quarter of 2023. The increase is partly attributable to a significant rise in mortgage rates, which have caused a 32.5% drop in mortgage-based sales. Experts predict that mortgage rates won’t fall below 6% until the end of 2025, despite expectations of lower rates in 2024. This could give more buyers access to the market using a mortgage, pulling down the market share of cash buyers. However, cash sales may make it more difficult for new homebuyers, exacerbating the issue of first-time homebuyer affordability.

Single-family homes and townhomes took longer to sell in Manhattan during the fourth quarter of 2023, with a decrease in listings while average sales prices showed a significant quarter-over-quarter and year-over-year increase. Home prices are expected to rise modestly in 2024 due to limited supply and an increase in sales. Entry into the housing market will be mainly motivated by an anticipated slide in mortgage rates, offset largely by a rise in sales. Mortgage-based sales growth is expected to pull down the market share of cash buyers, indicating that cash sales will remain above longtime levels. An increase in mortgage-based sales will allow more buyers to enter the market.

The increase in all-cash home sales is contributing to limited availability of affordable homes for first-time buyers. Mortgage rates peaking at 8% in October 2023 led to a stark decrease in mortgage-based sales. Capital Economics anticipates that mortgage rates will not fall below 6% until the end of 2025. Despite hopes for lower rates in 2024, this could nonetheless impact buyers trying to enter the market. Experts predict that the expected uptick in mortgage-related sales will likely pull down the market share of cash buyers, as market share is expected to rise in connection with mortgage-related sales.

Surging mortgage rates led to a reduction in mortgage-based sales and a significant increase in all-cash home sales in Manhattan during the fourth quarter of 2023. Capital Economics anticipates that while mortgage rates are predicted to fall below 6% until the end of 2025, an increase in mortgage sales will pull down the market share of cash buyers. However, more buyers will be able to enter the market using a mortgage. Despite this, cash sales may make it more difficult for new homebuyers to purchase property, exacerbating the issue of first-time homebuyer affordability. As a result, there is an increase in the reliance of cash buyers and a surge in bargaining power of the ultrawealthy, leading to tougher conditions for new homebuyers. Meanwhile, buyers and sellers are preparing for an 8% mortgage rate as the housing market faces challenging conditions due to record-high mortgage rates. Mortgage sales have declined by 32.5% due to an increase in mortgage rates, and there has been a decrease in listings, with the average sales price increasing in the fourth quarter of 2023. Prices are expected to rise modestly in 2024 due to limited supply, and the pace of the real estate market has slowed, redirecting the focus on all-cash sales.



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