Spring into Action: Manhattan Leads the Way

I came across an article suggesting that inventory could see a significant increase of up to 40 percent. The reasoning behind this increase contradicts the theory I shared in January, which posited that as mortgage rates dropped, inventory would rise, since people would be more inclined to sell and/or buy.

Mike Simonsen, the president and founder of Altos Research, presents a different perspective. He argues that inventory has actually been on the rise for the past two years, coinciding with an increase in mortgage rates. Currently, rates are higher than they were last year, and inventory is up by 21 percent compared to the previous year. Simonsen attributes this trend to the Federal Reserve's decision to reduce short-term rates, a decline in inflation, and a possible increase in unemployment. In fact, Greg Heym, Chief Economist at Brown Harris Stevens, notes that the unemployment rate has just reached 3.9 percent, its highest level in two years. Despite the economy's resilience, the supply of homes on the market continues to increase and is expected to keep growing until interest rates begin to decline, according to Simonsen.

Turning our focus to the luxury market, there has been a decrease in new development inventory, but this hasn't significantly affected sales due to luxury resales compensating for the lag in new construction. The point being is that inventory volumes will vary when you zero in on a particular market segment, like luxury sales. 

Whether Simonsen's analysis is accurate remains to be seen. Meanwhile, we are hearing that listings are coming up in the market, with numerous exclusive agreements signed in recent weeks, suggesting a busy spring ahead. Additionally, open house attendance has been notably higher compared to last year, indicating pent-up demand and a readiness among prospective buyers to enter the market.

Also notable in the fluctuating landscape of mortgage rates, the average rate for a 30-year mortgage recently fell from 6.94 percent to 6.88 percent, marking the first decline in five weeks. A year ago, the rate averaged 6.73 percent. This may serve as another incentive for individuals to capitalize on the current market conditions while they last.

As we approach spring—a bustling time in the real estate market—anticipation is high for an active season ahead. Whether you're considering selling, buying, or simply seeking information, feel free to get in touch. I'm here to offer my expertise and provide any necessary reports or insights to assist you in your decision-making process. There's no pressure or obligation to work with me – I'm happy to help however I can.

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