2024 NYC real estate forecast: Buyers and sellers emerge, renters gain leverage

Deals in New York City’s sales market plunged in 2023, a result of uncomfortably high mortgage rates that turned off buyers and sellers alike. Even buyers who didn’t need financing were left high and dry because of very low inventory. The problem, in a nutshell: Sellers were sitting on mortgage rates as low as 3 percent and were reluctant to buy if it meant paying 7 or even 8 percent.

Mortgage rates have edged down in the last few weeks—in December the 30-year fixed mortgage rate fell below 7 percent for the first time since August just as the Federal Reserve signaled that it expects to make three interest rate cuts this year, which will lower the cost of borrowing further.

Those cuts are expected to bring buyers back into the sales market this year and get the gears moving again in both the sales and rental markets.

The Fed’s plan “will take some of the pressure off the rental market by encouraging renters to buy,” says Jonathan Miller, president and CEO of appraisal firm Miller Samuel.  As a result, he says, “NYC rents will come down, but not dramatically.

“If 2023 was the year of disappointment, 2024 will be the year of incremental change. It’s not a snappy catchphrase,” Miller acknowledges. But most will probably take it.

Ready to get started? Our 2024 forecast is designed so you can skip ahead to the section most relevant to you via the links below. However, because each segment of the NYC real estate market is interconnected, we recommend reading through the entire article when you have the time.

• What to expect if you’re a renter: A little more leverage with landlords
• What to expect if you’re a buyer: More listings surface as mortgage rates slip
• What to expect if you’re seller: A new way of compensating brokers

Whether you plan on buying, selling, or renting a new place, here’s what you need to know to achieve your real estate goals this year.

What to expect if you’re a renter: A little more leverage with landlords

If you’re hunting for a new apartment in the early part of the year, you’re likely to catch a break. You’ll find you have more options to consider thanks to an increase in listings. That’s a big deal for NYC renters, not just because you have a better shot at getting the location, layout, and amenities you want (or at least some of what you want), but because additional listings put pressure on rents.

As inventory rises in 2024, you can expect rents for new leases to stop climbing, says Kenny Lee, economist for StreetEasy. But don’t expect a sharp drop, because inventory levels are still below pre-pandemic levels.

A rent drop in Manhattan

Renters will find some relief in an unexpected place: Manhattan. Asking rents will likely fall as landlords face the most competition to attract tenants. Why are there more listings here than other parts of the city? One explanation: In the past year, soaring rents encouraged more owners to become landlords, resulting in a 15.9 percent year-over-year increase in the borough’s inventory in 2023, according to StreetEasy.

But at the same time, landlords have been aggressive about encouraging tenants to renew their leases, and with the seasonal winter slowdown upon us, inventory has piled up. 

Some new listings are a result of Local Law 18, the Short-Term Rental Registration Law aimed at eliminating illegal rentals. The rules require owners to register their place with the city; in return they are given a registration number that must be displayed on listings. Owners and listing sites that are not in compliance can face steep fines.

“Many of these units were bought by non-institutional investors who are now faced with the option of either converting to a standard lease with a lower return or selling. As the sales market is not exactly on fire right now, seeking new, longer-term tenants seems like the easy choice,” says John Walkup, co-founder of UrbanDigs, a real estate data analytics company. 

It’s not clear how much NYC's rental inventory will grow due to these changes or whether this trend will continue, he adds.

The ascent for NYC rents started sputtering in the fall and then showed a surprising decline for Manhattan in November.

According to the Elliman Report, Manhattan’s median rent in November slipped month over month, dropping 4.6 percent to $4,000, Miller, who is the author of the report, previously told Brick. November’s median rent is 9.1 percent lower than the August peak of $4,400

“Manhattan’s median rent is falling faster than anticipated,” Miller says.

But the downward slide doesn’t match the pace of rocket ship-like rent increases last year, a result in part of the Federal Reserve’s rate hikes, which tipped many would-be NYC buyers into the already tight rental market.

Prepare to negotiate

As Allia Mohamed, CEO of rental platform openigloo, explains it, seasonality is returning to the NYC rental market, and that means the return of the typical winter slowdown and a willingness on behalf of landlords to make deals. 

“We’re also seeing more concessions from landlords, such as one month free, especially at new developments, and no-fee apartments, where the landlord pays the fee,” she says. New listings are being advertised with concessions and even if they don’t, Mohamed says renters should be aware you have some ability to negotiate—which hasn’t been the case for apartment seekers in the past two years.

Pay attention to how long an apartment has been on the market—if it has sat for more than 30 days you have a better shot at asking for a free month, amenity fee waiver, or even a rent decrease. But renters should “use their judgment,” she warns. If your goal is to stay long term, you need to prepare for a rent increase when it is time to renew your lease.

That’s a big deal because any rent discount goes away at lease renewal time, and the increase is based on top of the gross (not net) rent. One way you can look ahead is with openigloo’s Listings from the Future. For example, if you know you need to move in four or six months the site can show you listings expected to hit the market then.

Where and when to catch a deal

Renters likely have until the end of March to catch a deal, says Adjina Dekidjiev, a broker at Coldwell Banker Warburg.

Rents “typically decrease during the winter months, especially for apartments in less desirable neighborhoods. The pattern will likely continue until the start of the busy season in April. Apartments farther from transportation and without outstanding features/amenities will take longer to rent unless they're priced well,” she says.

She says concessions are typically a feature of the slow season, but they depend on several factors, including the location, amenities, and apartment size.

“There are more one bedrooms and studios available than two bedrooms and three bedrooms currently, so owners will likely continue to offer concessions for these,” Dekidjiev says.

Temper your expectations

Becki Danchik, a broker at Coldwell Banker Warburg, says owners of luxury rentals will need to lower rents because they are having trouble filling vacant apartments. 

While renters will have more listings to choose from, they’re not all great places.

“Renters seem to be more selective because there is more inventory to choose from. I have heard concerns and complaints from renters that while there are properties to see, those properties do not live up to their expectations. So I think both sides need to adjust their expectations,” she says.

Should you stay or should you go?

Brian Hourigan, managing director at BOND New York, expects to see an uptick of leasebreaks in the new year. Tenants will have to make a calculation to see it is worth the cost of moving and any leasebreak penalty to save money over the longer term, he says.

Some renters may get better deals if they opt to sign a new lease somewhere else. In the next quarter, landlords will likely push market-rate tenants to sign longer leases of 16-18 months, he says.

“Tenants will benefit from longer-term leases with the predictability and stability of pricing which comes with that, even though they might be asked to pay a bit more when their lease comes up for renewal,” he says.

What to expect if you’re a buyer: More listings surface as mortgage rates slip

If you’ve been waiting to buy in NYC, 2024 appears to be the year to make your move—certainly better than 2023 (despite what we said last year. Oops!)

There’s one very important change that nobody saw coming: Starting this year, buyers may (emphasis on may) find themselves on the hook for broker’s fees.

That’s because if you work with a buyer’s broker who is a member of the Real Estate Board of New York, broker fees are no longer something you can assume are the seller’s responsibility. REBNY announced in October it was changing its universal co-brokerage agreement to “decouple” commissions; the change went into effect January 1st. It's an effort to get out in front of the many anti-trust suits cropping up across the U.S. and here in NYC.

What does it mean if you’re buying in 2024? Well here's how it is supposed to play out: A seller will negotiate a fee with their broker and make a separate offer to your broker in writing. Your broker can then accept, reject, or negotiate the offer. If the seller doesn’t offer a fee to your broker, or doesn’t offer enough, under REBNY’s new rules your broker may negotiate their fee with you, which means budgeting an extra 1 to 3 percent of the purchase price.

Don’t be surprised if your broker wants you to sign something to clarify the terms of working together.

As Phil Horigan, founder of The Leasebreak Team, explains, “Generally in NYC only listing agents have needed to worry about getting their client to sign anything before agreeing to work together. I think buyer agents are going to have to start being trained on getting their buyers to sign and negotiate buyer agreements,” he says.

Be prepared for a broker to make a case for why their services are worth paying for, says Douglas Wagner, manager of brokerage services, BOND New York.

“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 or an ongoing professional practice,” Wagner says.

Interest rate cuts lower borrowing costs

If you were hoping to buy in NYC last year, you were likely stymied by a lack of inventory.  Listings dropped 15 percent in 2023 compared to 2022, according to Kenny Lee, economist at StreetEasy.

What gummed things up: Sellers who were sitting on mortgages with rates in the 3 percent range were reluctant to sell and buy somewhere else if that meant they would have to get a mortgage at nearly 8 percent.

But that scenario has already shifted. In December, mortgage rates were approaching 7 percent when the Federal Reserve officials wrapped up their last meeting for 2023, leaving interest rates untouched. They forecast that they will cut borrowing costs three times in 2024. 

The Fed raised rates 11 times during 2022 and 2023 to tamp down inflation but has held rates at 5.25-5.50 percent since July.

“There are signs that the cumulative rate hikes are doing their job and working to bring the rate of inflation down to its goal rate,” says Melissa Cohn, the regional vice president of William Raveis Mortgage. “High interest rates are impacting the economy and hopefully will bring inflation back to 2 percent [this] year,” she says. 

Cohn says she thinks now is a good time for potential buyers to “start making a move,” given that mortgage rates have fallen in recent weeks, and that low demand during the holiday season may soften sellers’ resolve a bit. Because the Fed didn’t reveal the timing of this year’s interest rate cuts, buyers may want to act now rather than wait for a friendlier economic environment that may not materialize.

“We’re probably at an inflection point where rates have come down enough that more buyers are coming back into the marketplace, and prices have certainly not gone up,” Cohn says.

Prices will eventually increase

After falling for four consecutive quarters, median prices for Manhattan co-op and condos appeared to stabilize in the third quarter, according to the Elliman Report. (Fourth quarter sales data was unavailable at publication time.)

But eventually there could be a swing in the other direction this year as more buyers and sellers pile into the market.

As mortgage rates fall, more sellers will be inspired to sell their properties, says Brian K. Lewis, a broker at Compass. That means buyers should have more options, he says, predicting that prices will eventually rise—“but not dramatically”—with more listings.

“Many would-be sellers are stuck in their current homes, married to their incredibly low interest rates. As mortgage interest rates come down, more sellers will enter the marketplace, finally ready to move on with their lives, and get to their next home. This means more choices for buyers in a market already starved for inventory,” Lewis says.

New condos may edge out resales

StreetEasy’s Lee predicts that resale inventory will remain limited in 2024, since some sellers won’t be motivated by mortgage rates that are still above 6 percent to become buyers themselves.  

“Against this backdrop, home shoppers will increasingly consider condos in newly constructed buildings,” Lee says.

There are new developments coming to market next year, but they are increasingly aimed at the luxury buyer, and there’s still not a lot to choose from, Ian Slater, a broker at Compass. 

“There are a handful of buildings to come to market next year, but the majority skew to the ultra-luxury sector, which is a reality of what happened during the pandemic: the wealth gap widened and it became more expensive to build,” Slater says.

According to Brown Harris Stevens Development Marketing, a slim pipeline translates to fewer building launches in 2024. The firm says 959 new development units across 17 buildings are expected to launch in Manhattan alone in 2024. [Editor's note: This data was revised by BHSDM after publication.]

Another source forecasts a more robust number of condo buildings opening this year as a result of new development in the outer boroughs.

Based on submitted offering plans for Brooklyn, Queens, Manhattan, Marketproof, a real estate data company, finds 2,277 units at 108 buildings projected to launch in 2024. That number excludes conversions.

“Incredibly, 81 of these are in Brooklyn, and of the 81, 58 have between one and 10 units, says Kael Goodman, Marketproof’s CEO. “Small condo projects in Brooklyn are alive and well.”

Goodman says that in Manhattan, where land and construction are more expensive, only eight projects in total are in the 2024 pipeline with just 370 units.

In Queens, 19 projects are in development with 870 units, including several projects with more than 100 units. 

“With existing supply gradually getting sold and the pipeline of new inventory light, we expect new development prices to tick up in 2024,” he adds.

Opportunities for co-op buyers

On the other hand, Lisa K. Lippman, a broker at Brown Harris Stevens, is betting on co-ops on Fifth Avenue and Central Park West to draw buyers this year.

She says there are opportunities for buyers to score renovated co-ops. Unrenovated co-ops offer good value, but be sure to do your due diligence on renovation costs, she says.

Where to get a deal

A more affordable option for buyers looking for new development is to head to the East Harlem area, where the Q train expansion is encouraging new construction, says Lucy Wu, an agent at BOND New York.

“There's still value in the area there if a buyer is looking to purchase in Manhattan,” Wu says. The average price per square foot for Manhattan is $1,362 vs. $840 East Harlem, she notes. “This area could see a possible 10 percent increase in appreciation over the next decade as the subway line reaches completion and the neighborhood gets built up,” she adds.

Buyers in neighborhoods like the Upper East Side and Financial District are best positioned to take advantage of low levels of demand, says Seth Levin, a broker at Keller Williams NYC. But the window is closing.

“The best discounts will most likely happen before interest rates drop more significantly. Many savvy buyers will take advantage of this and either buy without financing or refinance in the near future. When interest rates do come down meaningfully, both buyers and sellers will enter the market,” Levin says.

Bidding against foreign buyers

As a buyer, you can expect to face competition from international buyers who are returning to Manhattan post pandemic, says Nicole Gary, an agent at Keller Williams NYC.

Foreign buyers made up nearly a third of the city’s investors in 2023, according to The Real Deal, citing a report by brokerage Avison Young. It was the highest share of the total buyer pool since 2019.

New York will always attract international buyers, Gary says. “They feel it is a safe investment and a great place to put their money,” Gary says. This is fueling deals in buildings that allow pieds-à-terre.

Another group throwing their weight around that you’ll have to contend with: Parents buying for their adult children who are in college or just starting their career.

“It doesn't make sense for them to rent since rents are so high, especially in the luxury market,” she says.

Then there are the listings you need a broker to root out for you. “I believe we will see more whisper listings and off-market deals happening, due to the lack of new developments coming online,” Gary adds.

Baby Boomers downsize

Seniors aged 65 years and older currently represent 20 percent of the population—and that share is expected to soar in years to come as the Baby Boomer generation ages. Lots of New Yorkers will age in place, but others will downsize or move to independent living facilities.

That means opportunities for buyers, especially those looking for hard-to-find larger apartments, according to Leonard Steinberg, chief evangelist at Compass.

“Baby Boomers could fuel the inventory of larger homes as they become empty nesters. Many of these homes require renovation, but this seller won't be as price-greedy as their purchase price many years ago was probably much lower than today's pricing levels,” Steinberg says.

What to expect if you’re seller: A new way of compensating brokers

If you want to sell in 2024 you will have to wrap your head around the broker fee breakup and what it means for you.

That’s because if you work with one of REBNY’s 14,000 member brokers, the dominant broker association in NYC, you are no longer on the hook for paying an equal commission to the broker working for the other team.

As of January 1st, for REBNY brokers, the commission has been “decoupled,” meaning a seller no longer pays a fee that is split 50-50 between the buyside and sellside brokers. You as the seller will be required to separately negotiate fees with each broker and make your offer to the buyer’s broker in writing.

Listing brokers can no longer offer compensation to the buyside broker, even on your behalf. 

If it seems like a lot of work for you as the seller, consider this: The changes mean you don’t have to pay someone who you didn’t hire the same amount as the broker you did hire, unless you want to.

For example, you may offer 3 percent to your broker, and 2 percent to the buyer’s broker—or 1 percent or even zero. Of course, offering low compensation conceivably comes with some risk.

“Sellers who elect to make lower or no offers of compensation to brokers representing buyers will likely get what they pay for,” says Douglas Wagner, manager of brokerage services, BOND New York.  

“Sellers will have to remain competitive in the market in order to attract as many [buyers] as possible, including those who have their own agents,” Wagner explains. Buyer’s agents are not required to accept compensation offers they think are too low, he says.

“It's logical to think some agents might avoid working with such properties,” he adds.

The broker fee split is a major departure from the status quo and it will take some time to see how the NYC real estate industry responds to these changes, what trends emerge, and what are the best strategies for sellers—and whether there are additional changes in response to the antitrust lawsuits.

Sick of high rents and ready to buy

Sinking mortgage rates will draw some buyers back into the sales market—and that goes for sellers too if they were waiting for rates to drop before they buy again.

The sales market already started to pick up as of early December after mortgage rates started declining slightly, says Ian Slater, a broker at Compass. 

The Fed’s announcement of three rate cuts in 2024, “will absolutely give hope to buyers of affordability, and it will also push people off of the sidelines who have been sitting with cash. I don't think the floodgates will open, given you still have a lot of the world sitting with 2-3 percent mortgages that make it difficult to move. However, it will pick up more earnestly,” Slater says.

On the one hand, the upcoming presidential election will inevitably be contentious “and always causes a portion of the buyer pool to be hesitant,” he says.

And some renters may be done with paying high rents and ready to buy.

Leonard Steinberg, chief evangelist at Compass, points out “there are millions of Millennials who have yet to buy a home who after a few years of paying high rents are now convinced buying makes more sense.” 

Expect a slowdown until spring

But the main problem—low demand—will persist: An extended period of low demand means it is difficult for sellers to find potential buyers, as John Walkup, co-founder of UrbanDigs, a real estate data analytics company, writes in a recent report. November was the sixth consecutive month that NYC sellers faced a challenging market, with just as many listings going off the market or expiring as going into contract, he found.

Walkup says he expects the market to remain slow until spring, so if sellers didn’t sign a deal by mid-December, “you should prepare yourself that the next wave of buyer traffic will not likely begin until late February or March. Plan accordingly!” 

Preparing to sell means pricing carefully

Apartments that are priced correctly will go into aggressive bidding wars, especially in the spring,” says Melissa Leifer, an agent at Keller Williams NYC. Apartments that are “priced spot on or slightly under move fast and will go into bidding wars. Overpricing, things sit for months,” Leifer adds.

She points out that buyers pay careful attention to comps. Buyers “are looking at what closed and the prices to make sure they aren't overpaying,” she says.

But for buyers to get comfortable enough to submit bids and proceed to the closing table will require two, simultaneous events, Wagner says: price cuts and mortgage rate drops.

“Sellers will need to recognize that only price improvements will inspire buyers to engage, while a continued cooling of mortgage rates will provide buyers with the confidence to sign contracts,” he says.

The first half of 2024 could bring a slow rise in activity, Wagner says, and with a combination of price cuts and more favorable interest rates by spring, “it is very possible that the log jam could be cleared with just a few further reductions and we could experience an overdue frenzy of selling and buying after so many quarters of doldrums,” he adds. 

What will sell and what will sit

With all the hurdles that go into renovating today, properties that need work don’t sell as quickly as those that are in move-in condition.

However in parts of NYC where townhouse supply is limited, for example, in Cobble Hill, Windsor Terrace, Prospect Heights, and Park Slope, “buyers are more willing to do work there, as long as the home is priced accordingly,” Leifer says.

Seth Levin, a broker at Keller Williams NYC., says buyers are targeting renovated properties in prime locations and buildings.

“We anticipate this trend to continue. Prime Brooklyn locations like Williamsburg and Park Slope will continue to be sought after and competitive. The same is true for Manhattan's Greenwich and West Villages,” he says.

Investors and international buyers return, but there’s concern

Levin says that investors and international buyers “are expected to enter the market more meaningfully” in 2024 but there is a potential wrinkle that could impact sellers. 

In June, Albany lawmakers approved legislation called the LLC Transparency Act. It is a stricter version of the 2021 federal law, the Corporate Transparency Act, which requires LLCs and other corporate entities to unmask their owners to the federal government beginning in February. The New York state bill goes farther, obligating LLCs to reveal owners’ names and business addresses to the state, information that would then be added to a public-facing database. 

The goal of the legislation is to provide greater transparency. Assemblymember Emily Gallagher, who introduced the legislation, says the legislation would be beneficial to renters by making ownership information available to state housing regulators and building code inspectors, for example.

But brokers who work with international and high-end domestic buyers are spooked by the state's version of the law, which they say is too broad and would encourage would-be NYC buyers to look elsewhere.

Nikki Field, a broker at Sotheby’s International Realty who works with a large number of international clients, calls the New York bill “alarming.”

Today’s luxury buyers “don’t need or want that publicity for their privacy and safety. They don’t want others to know where or how much they are spending,” Fields says, adding that the bill raises deep concerns among her clients about security, calling it “extraordinarily invasive.”

However, on December 23rd, Governor Kathy Hochul signed a stripped-down version of the bill that removed the provision requiring LLC data to be published on a public database. Instead, the information will compiled in a database that accessible to law enforcement and government agencies.

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