Luxury home sales in New York City ended 2022 on a $10.3 billion high. However, with fears of a potential recession, rising interest rates, and inflation, there’s no question that the luxury market is up against a variety of challenges in 2023. From understanding the state of the market to the current trends — and what buyers should consider — here’s what you should know regarding the city’s luxury real estate market.

Understanding the luxury market of 2023

The luxury residential market in NYC faces a variety of challenges at the start of 2023 — including high interest rates and “signs of a disappointing bonus season” on Wall Street, according to the Wall Street Journal. “You have a low-bonus season, high interest rates and a deteriorating stock market,” says Donna Olshan, president of Olshan Realty. “That absolutely affects the luxury buyer.”  According to Rachel King, a broker with the real estate firm Serhant, some developers are offering concessions. Regarding the future of the market, however, Garrett Derderian, director of market research at Serhant notes that the first six months of 2023 are likely to be quiet, though he expects activity in the luxury market to begin picking up in the second half of the year.

To further illustrate the state of the luxury market, one Variety article published in October of 2022 states that prime Manhattan and Brooklyn real estate “remains a portfolio must-have for industry talent and power players,” while below the line buyers “venture out” to neighborhoods such as Bushwick, Bay Ridge, and outer Queens. It's noted that predicting the future of the market is difficult, with Pamela Liebman, president and CEO of Corcoran pointing out that climbing mortgage rates were already impacting sales. Liebnan said “I think people are looking — if they find what they really want, they are buying it.” According to the Variety post, Liebman also noted that talent was still considering buying in downtown Manhattan while penthouses continued to interest L.A. buyers. 

A transformation in luxury trends

When it comes to how luxury real estate trends have transformed, City Signal notes that luxury bunkers, above ground pools, and the popularization of short term rental properties are all set to be prominent trends of the 2023 NYC luxury real estate market. One Mansion Global article features Sarah Patton, director of development at Compass Development Marketing Group, who discusses how the luxury landscape has changed in the wake of the pandemic. “Coming out of Covid, people have been craving a deeper sense of community,” she says, going on to note, “So that’s something we’ve really focused on, especially in rental buildings.” Patton notes that consumers are looking for more shared amenities and communal spaces as a result, which has driven a need for amenities such as coworking spaces and areas for networking with neighbors.

The value in renovation

While purchasing an NYC luxury property might sound daunting in 2023, investing in a property without the luxury price tag (or features) may be the preferred route for those who are looking to navigate the market with caution. Investing in property in a more affordable neighborhood or opting to buy a fixer upper to flip are just two ideas. That said, renovations can allow for luxury additions later on, though there are considerations to keep in mind, such as board approvals, permits, and other necessary paperwork. Having a measured building survey conducted can also be of value when planning to significantly renovate a property. A measured building survey will work to provide an accurate representation of the building layout/premises in regard to measurements of distinct structural and architectural building elements. This can be useful in a variety of situations — such as by supporting architects and construction workers during the planning, design, and build process.

With several factors at play, the luxury real estate market in NYC is changing. While trends have changed to include luxury bunkers and focusing on a sense of community via luxury rentals, those who opt to purchase an NYC property without the luxury price tag (in hopes of transforming it via renovations later on) should keep a variety of considerations in mind.

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