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Discover the Latest with Paradigm — Our Monthly Newsletter
Hello Everyone, we hope you are having a great summer!
Thank you for your support over the past 10 years. We recently marked a decade with Compass (formerly Urban Compass), which has grown to over 35,000 agents nationwide, making it the largest brokerage in the country with over 20 percent market share in the top 20 markets and over 35 percent in Manhattan.
As the company grew, so did our team, which now includes knowledgeable and incredible members, propelling us to become one of the highest-producing teams in the country. With this success, you reached out to us for advice not just in Manhattan and Brownstone Brooklyn, but also outside the city. Along with our partnership with other Compass brokers across the country, we knew we had to grow beyond just Scott and Mark. Thus, Paradigm Advisory—an idea that had been developing for many years—was born. While our name has changed, our commitment remains the same: to provide expert real estate advice nationwide.
Enjoy the newsletter!
Always,
Scott, Mark, and Paradigm
The Post Labor Day Market by the Numbers
As August comes to a close, we’re entering one of the most crucial times in our city’s real estate calendar—post-Labor Day. While we don’t have a crystal ball, the market is undeniably shifting, and the signs are unmistakable. As we’ve said over the years, analyzing the real-time data of signed contracts is key, and this year is no different. The market is in flux, and staying ahead of the curve is more critical than ever.
Signed Contracts Above $1M In The Last 30 Days
$1M - $2M
$2M - $3M $3M - $5M $5M - $10M
$1M - $2M
$2M - $3M
$3M - $5M
$5M - $10M
Trends Summary
August, usually the slowest month in the year, was exceptionally active. If this momentum continues as we expect it to, we could see the second busiest four-month period in five years, surpassing the 10-year average. However, it still remains a buyer’s market. The average days on market (DOM) is steady at around four months. The average closing price per square foot (PPSF) over the last 30 days is significantly higher than the average in-contract PPSF. Though contract volume is 16.71% higher than closings, the average PPSF for signed contracts is 9.22% lower, indicating sellers adjusted prices to meet market conditions. Lower mortgage rates, now often around 5%, have played a crucial role in closing this gap.
Key Takeaways
The past four years have brought dramatic shifts—pandemic impacts, geopolitical instability, and mortgage rates swinging from 2% to 8%. In this election year, with recession concerns, many buyers may stay on the sidelines despite limited inventory and the Fed’s plans to lower rates. In the coming months, sellers must price realistically to match market demand. Long-term, the market could shift, leaving buyers wishing they had taken advantage of current opportunities before rates adjusted down.
The market is more resilient than ever. Manhattan is buzzing with unexpected activity and bidding wars ahead of the fall season. We’re gearing up for an incredibly busy fall—if you are thinking about buying now is the time to act to get ahead of the curve.
Signed Contracts In Manhattan Aug 1 - Nov 30 Through The Years Above $1M
Understanding the Market Through a Case Study
When financial markets are choppy and turbulent, the residential markets often respond in kind. That said, we have observed two dominant trends in the current market:
• Quality properties, much like quality companies in prime locations, tend to hold their value despite market noise and chaos.
• The more aesthetic and finished a home is, the more desirable it becomes. Most buyers, especially post-COVID, prefer to have things now rather than wait for potential improvements.
On the extremes, these trends have resulted in some selling prices being below 2003 levels in certain parts of the city, while in other areas, values have remained strong despite 20-year highs in interest rates. As we’ve discussed, each situation is more specific than ever, and in choppy markets, we advise clients on how to succeed in their trades while addressing their housing needs.
A recent example involved a home on 79th and 1st, which had been on the market previously. The first broker listed it too high for the location, and the last listed price was also excessive.
We recommended setting the new listing price at a $1M discount from the previous listing, as no comparable sales supported the old price. We suggested testing the market to see if conditions had improved since the property was last listed; if not, we would lower the price by $1M. We listed the property, and as expected, there was no initial response. The seller agreed to lower the price by $1M. Within two weeks of the price adjustment, we went under contract at 9% above the reduced price. Despite the market conditions, interest rates, and excess supply in the location, a bidding war ensued, and our seller was ecstatic.
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378 Broome St, Unit PH — NoLita
Boutique condominium designed by HWKN, led by renowned architect Matthias Hollwich.
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A Message From Scott and Mark — NAR Lawsuit
Brokerage fee structures have become much more transparent.
We believe this is a great thing, promoting more transparency and clear cooperation.
Paradigm Advisory is still operating as usual. We are incredibly grateful to be working at Compass, which provides us with the tools, knowledge, and expertise to advise you in the complex New York City market.
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The Numbers
Well that was fast. September certainly flew by as the world kept moving at breakneck speed. As we forecasted, the market was strong in September and the number of signed contracts exceeded every September in the last 5 years except 2021 which was a record year.
Here are the numbers:
The numbers show that compared to 2023, the number of signed contracts is up over 37% year-over-year. That said, they are still off the 10-year average by almost 14%. Interest rates coming down, along with sellers pricing more realistically at marketclearing levels, have increased activity. However, a lack of inventory and aggressive pricing by sellers who are not meeting the market are causing signed contracts to remain below the averages.
There were almost twice as many signed contracts over $10M in September than there were in August (26 vs 14) and 33% more from $5M-$10M. That said the $1M to $5M market decreased in number of signed contracts by 14%.
Signed Contracts Over $1M In The Last 30 Days
$1M - $2M
$2M - $3M
$3M - $5M $5M - $10M
Closed Over $1M In The Last 30 Days
$1M - $2M
$2M - $3M
$3M - $5M
$5M
Sneak Peek
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The Emotion of Elections Come and Go but the Logic of Interest Rates are the Constant
Signed Contracts Over $1M: Oct 1 - Oct 31, Year Over Year
Many of you may have read The New York Times article recently discussing the slowdown in large consumer purchases ahead of an election. Headlines and articles like this sometimes drive a narrative—whether 100% true or not. What is apparent, though, is that these decisions are much more nuanced in today’s ever-changing, multifaceted, and hyper-information-driven world. The chart above, for instance, while dramatic, does not account for 2020 being both an election year and a pandemic year. Similarly, why were August and September of this year much more robust compared to August and September of 2023? And why was October of 2023 on par with October of 2021? You ask why… and we dug deeper.
As discussed in last month’s newsletter, it’s more about the Monetary Policy of the Federal Reserve. Quite simply, the 10-Year Treasury Note (Chart Below) has been extremely volatile over the last year, and since we last wrote to you, rates have risen significantly. Conversely, in October 2023—if you remember last fall—the Fed was signaling it was about to start lowering the Fed Funds rate, and the 10-Year, which forecasts forward, began its descent before sharply increasing again at the end of 2023 when the Fed signaled that inflation was not under control.
What Are We Listening To
Odd Lots from Bloomberg is a favorite as it’s very digestible, and the hosts, Tracey Alloway and Joe Weisenthal, are genuinely curious, quite nerdy, and fun to listen to. They feature great guests—from Regional Federal Reserve Presidents to crypto traders to policy wonks.
To learn more about how the 10-Year and mortgage rates interact, listen here.
Around The City
Just when you thought that Manhattan’s building boom of the last 25 years was over and the skyline couldn’t get any denser, Larry Silverstein, the 93-year-old builder, unveiled scale models of World Trade Center 2 and 5. When complete, the complex will rival Hudson Yards as a mixed-use hotel, office, residential, and cultural destination, featuring new buildings designed by Sir Norman Foster and, of course, the 9/11 Memorial site. At 93, it’s inspiring to see him still with the energy to rebuild, transform, and improve our city!
In terms of closings, what is apparent is that closings were up 23% versus the previous month, and the average PPSF is down from $2007/sqft, which signals that sellers made adjustments and met buyers where they were when rates were at their highs. It will be interesting to see if this trend continues or if this is the bottom of the market and prices have stabilized. Needless to say, the sellers that realized this are in contract, sold, and moving on with their lives.
Curious about the latest national trends? Discover more here!
Gaming In New York City — New Renderings By Related for the next Phase of Hudson Yards
We all know that living in New York is expensive compared to other places, and to help lower costs for residents, cities impose taxes and issue different types of licenses. In an effort to boost tax revenues, many municipalities have turned to gaming, citing it as a win-win for everyone. With that in mind, New York State has approved two new gaming licenses for Lower New York State, and it is widely believed that one of those will be in Manhattan. Learn More.
What We Are Reading
Clients frequently ask us where we get all our information about the city, and the great thing is that New York has so much material and history to explore. This summer, we had the chance to read a fun page-turner about the evolution of department stores in New York, highlighting how many women innovated and rose to workplace prominence despite facing tough battles to have a voice in the industry's development.
It’s a great read — let us know what you think!
Sneak Peek I 5 Bed UWS Condo Reach out for details
Contracts Signed in November are Up 8.71% from 5 Year Average
As we discussed last month, elections have both a psychological and emotional effect on people, and so do interest rates. With the election behind us, November saw the most buyers since 2021 decide to take the plunge and sign a contract. Despite higher rates, buyers seemed hopeful that the economy would improve, but more importantly, most realized that inventory will continue to be limited in the coming months due to increased demand, a shorter supply of existing homes, and a lack of a pipeline of new homes.
The interesting thing is that when we delve into the numbers further, the average discount was 3.09% from the asking price, while 115 was the average Days on Market. One thing to note is that while contracts for November are higher than last year, Year to Date we are still 19.52% off 2023’s numbers through November.
In other words, properties that are priced properly are selling, and those that are not are sitting. Inventory will continue to be constrained.
