Manhattan and Brooklyn Homes Hit the Market, With Carnegie Hill Quietly in Demand

The stuttering sales of homes in Manhattan and Brooklyn encapsulate the peculiar hurdles faced by New Yorkers seeking security—and investors seeking yield—in America’s most scrutinized property market.

Survey the real-estate listings for Manhattan and Brooklyn and one thing is clear: inventory is rising, but sales velocity is not. In early June, the number of homes for sale in neighborhoods such as Carnegie Hill, Harlem and Clinton Hill has crept upwards, with brokers touting everything from compact studios to restored brownstones. Yet the optimism of neatly staged parlors and freshly painted stoops belies a more tepid market reality—buyers dawdle, sellers compromise, and the city’s most coveted ZIP codes are, if not in the doldrums, then certainly sailing at half-speed.

The newsworthy fact is less a surge of activity than its opposite. According to data from the Real Estate Board of New York (REBNY), Manhattan’s signed contracts last month sat 24% below their typical spring burst, and Brooklyn’s new listings linger for weeks longer than in 2022. Recent sales include a $4.2m Carnegie Hill co-op, a Harlem walk-up at $849,000, and a Clinton Hill condo fetching just under $1m. These numbers sound buoyant, until one notes that sale prices have, after a pandemic peak, largely flatlined or slipped.

Such stagnation bodes ill for New Yorkers depending on property for wealth-building or stability. Renters, too, feel the pinch: juicier for-sale inventory tempts landlords to list, not lease. Meanwhile, young families and immigrant professionals face daunting downpayments as mortgage rates jog gently above 7%, according to Freddie Mac. Buying a starter home in a leafy, subway-adjacent Brooklyn enclave often means scraping together north of $200,000 in cash—and that is before steeling oneself for the city’s byzantine co-op boards or condo reserve requirements.

Rising property taxes further dampen any illusions of a simplified path to home-ownership. Local government, eyeing shortfalls, has in the past year hiked levies on multifamily buildings by 6%. For seniors on fixed incomes and recent arrivals seduced by the dream of equity, this perennial game of fiscal whack-a-mole keeps the calculus of buying in New York fiendishly complex.

For the city as a whole, listless sales portend weaker-than-hoped-for fiscal health. Last year, property taxes accounted for over $32bn—nearly half—of New York City’s tax revenue. A sluggish market suppresses assessed values, cramping municipal budgets and threatening everything from school funding to transit system repair. The city’s dependence on robust real-estate activity leaves it vulnerable to broader shocks, whether from Wall Street jitters or global inflationary squalls.

Broader implications ripple outward. Construction jobs, already down 4% from pre-pandemic highs, may wane further as developers shelve projects and banks scrutinize loans ever more cautiously. Retailers, dry cleaners, and local service providers in Harlem or Clinton Hill, long feeding off buyers’ move-in sprees, now watch anxiously as months pass between grand openings. Even the city’s ability to attract talent is imperilled; would-be residents fret that steep housing costs and uncertainty outweigh the appeal of bagels, galleries, and career acceleration.

In politics, the standoff over affordability sharpens. City Council leaders trumpet plans for rezoning, increased affordable housing mandates, and fresh taxes on pied-à-terres. Albany, for its part, wrestles with city leaders over the shape and scale of rent regulation. Last month’s budget debates saw tempers flare as upstate legislators balked at perceived bailouts for Gotham’s property market, gnawed by fears that generous incentives clog real progress.

It helps to recall that such strains are not unique to New York, even if their velocity is distinctive. In London, property values have wobbled following interest rate rises, and Paris, too, faces slowing sales as credit tightens. Nationwide, home sales in America are down 22% year-on-year, per the National Association of Realtors, with high borrowing costs freezing out would-be buyers everywhere from San Francisco to Miami. What marks New York’s present predicament is the simultaneous persistence of demand and the deep-rooted dysfunctions on the supply side—century-old co-op boards, sluggish planning approvals, and costly municipal requirements.

The trouble with New York’s housing fix

Some new policies show tentative promise. Mayor Eric Adams’ administration has dangled tax abatements for construction of rental housing and pleaded for speedier rezoning in underused commercial precincts. A pilot project in East Harlem, converting defunct offices to mid-income rental flats, has drawn cautious interest from city planners and mid-sized developers. Yet the spectre of high borrowing rates and ever-rising costs for labor and insurance has stymied builders’ enthusiasm, despite city cheerleading.

On a global scale, many look to Singapore or Tokyo, where robust pro-building policies have kept housing costs much lower compared to incomes. But New York’s fiercely local politics, Byzantine regulatory regimes, and chronic underinvestment in infrastructure yield neither the state-directed muscle of Singapore nor Tokyo’s construction-friendly zoning. A property system designed in the same century as the subway, if not the Brooklyn Bridge, hobbles bold, nimble solutions.

There is, as ever, more muddle than miracle in the city’s real-estate market. Investors, from Park Avenue family offices to pension funds in Toronto or Abu Dhabi, still regard New York bricks and mortar as a relative safe haven, but no longer take frothy annual price gains as a birthright. Average New Yorkers, meanwhile, remain caught in a bind: buying means steep costs and bureaucratic hassle; renting means volatility and few rights.

We reckon the prospect for real change—an increase in affordable, “missing middle” housing, sensible tax reform, and more welcoming planning policies—remains stubbornly distant. Until the city’s political class embraces greater competition, clearer regulation, and better balance between tenant and investor needs, Gotham’s notional real-estate “market” will continue to offer plentiful listings but precious few easy answers. It is, in its own exasperating, stop-start fashion, a market that fits the city: both alluring and obstinately resistant to reform. ■