The following is a closer look at the state of luxury in leading real estate markets around the world.
THE UNITED STATES
NEW YORK
Presidential election years typically freeze real estate markets, but 2024 was an exception to the rule for New York City. International buyers, looking for safe places to invest, kept the market moving throughout the year as well as leading up to the election, and Sonja Cullaro, EVP of Christie’s International Real Estate Group, estimates that foreign buying activity increased 20% to 30% from 2023. “Unrest around the world is driving activity in New York,” says Cullaro. However, Manhattan remains a buyer’s market with supply outstripping demand, and prices down by mid-single digits on a percentage basis in 2024. In terms of the luxury market, it’s in a sort of state of limbo, notes Christie’s International Real Estate Group CEO Ilija Pavlovic. Older co-ops, where deferred maintenance raises questions about the total cost of ownership, have fallen out of favor among luxury buyers, especially younger generations, while new development has been negatively impacted by higher interest rates. “There is less building going on in New York City,” says Pavlovic, noting that filings for new buildings in Q324 were 43% below their average since 2008. “Interest rates have had a much greater impact on development than on homebuying. It completely changes the math for these projects, and many won’t get built,” he says. But Cullaro and Pavlovic are optimistic about 2025. Wall Street bonuses figure to be substantial given the equity markets’ strong performance in 2024, while global Bitcoin investors are likely to shift some holdings into stable, hard assets like Manhattan real estate following the cryptocurrency’s 500% rise over the past two years. Meanwhile, luxury suburban inventory across the Tri-State area remains tight. Mortgage rates in the high 6s to low 7s continue to keep sellers glued to their current homes and home loans, and a much-hoped-for 5% range seems increasingly far off given end-of-year comments from the Fed.
“If interest rates go down, sellers will finally sell and release more inventory, which will also stabilize prices for buyers,” says Cullaro.
But both parties may have to wait a little while longer.
Powered by FlippingBook