Manhattan Contracts Soar As Miami Beach Contracts Decline Less

November 7, 2024
  • Manhattan Contracts Have Soared Year Over Year Every Month Since July
  • Miami Contracts Decline As Listing Inventory Increases From Record Lows
  • Miami Is More Dependent On Lower Mortgage Rates Than Manhattan Due To Lower Price Point

We released our new signed contract reports for New York and Florida today. The comparison between Manhattan and Miami showed both similarities and differences worth exploring. A lot of high-end buyers in Miami have homes in Manhattan so the linkage between the two markets has been long-term. I lived in Manhattan during the 1980s when it was quite rough and loved it immediately, but have never lived in Florida. Over the past decade, my business interests brought me to Miami, Boca Raton, Palm Beach, and St Pete quite a bit. Since the pandemic, lots of my close family moved to Florida so now I visit the state 4-5 times a year. I’ve learned to appreciate its success but the heat during each visit confirms that deep down, I will always be a cold-weather person (we always kept our house at 65F when our kids were still living at home – I wanted it to be set at 62F but decided we agreed we wanted our children to survive).

Using the data from the Elliman reports published today I created these charts looking at year over year patterns coming out of the pandemic era. The three-year window presented was designed to begin shortly before the early 2022 Fed pivot to higher rates through the most current month tracked. Click on the charts if you feel the need to see them overtake your screen with data goodness.

Some Basics

The charts show the year over year percent change of both newly signed contracts (blue) and new listings (gray) each month over three years. A newly signed contract is defined as a contract signed in the month of the report. It does not represent the cumulative total of contracts that haven’t closed yet. New listings represent only listings that entered the market during the month of the report, not the cumulative total. The idea behind these two “new” types of metrics is they show the current state of supply and demand ahead of the usual “cumulative” versions.

There are three distinct periods seen in the three-year window provided in both charts.

  • 1) Before the early spring 2022 Fed pivot to higher rates.
  • 2) Rapid mortgage rate ascent from early 2022 to late 2023.
  • 3) After the December 2023 rate pivot to stop raising rates

The third period is where their market patterns diverge.

Manhattan Contract Patterns In 2024

Manhattan didn’t experience much of a spring market. The year started with thoughts of three rate cuts but economic conditions were too robust for the Fed to justify a rate cut. However, an annual surge in Manhattan contracts appeared in July 2024 before any talk of rate cuts, let alone a 50 basis point cut in September. The entire New York City metro area also saw a surge in contracts beginning in July. Perhaps consumer patience after the 2.5-year wait for lower rates had run out. I can explain this better for Manhattan than I can for the outlying suburbs which saw a 2020 sales boom right after the spring pandemic lockdown ended. Manhattan boomed 9 months after the suburbs when the vaccines began to be distributed in 2021 (something about the incorrect theory that high-density areas were less safe caused the delay). New listings also surged in 2024 with newly signed contracts but not as intensely. The large increase in sales over the modest increase in supply will keep a firmer footing on pricing going into 2025.

Although mortgage rates rose steadily after the mid-September 50-basis point cut from nearly touching 6% on the 30-year to nearly reaching 7%, contract signings still surged in October.

Miami Contract Patterns In 2024

Miami-Dade County experienced a weak spring market for contracts like Manhattan but didn’t experience the summer sales surge that Manhattan did. The story in Miami has been the expansion of new listings. Unlike Manhattan, Miami’s listing inventory over the past several years has been at or near record lows. The surge in listing inventory has not resulted in excess supply…yet. Miami’s supply remains at about half of pre-pandemic levels and more new inventory should translate into more new contracts over the next six months. However, the lack of sales growth now suggests that the market seems more sensitive to higher mortgage rates than Manhattan is.

Final Thoughts

Miami had a cash market share of 62.7% in Q3 and a median sales price of $680,000. Manhattan had a cash market share of 55.7% and a median sales price of $1,115,000. Given the surge in Manhattan contracts since July while Miami saw fewer annual declines than they had in 2022 and 2023, it would appear that the lower price points make the market more dependent on mortgage rates and rates have been climbing.

With the election results, it appears that the probability of stable or even higher mortgage rates in 2025 increased, even if the Fed cuts a little bit more in November and December. On the bright side, Miami revoked Diddy’s key to the city.

Did you miss Friday’s Housing Notes?

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