Brown Harris Stevens recently had an all-staff meeting to discuss the current state of New York City’s real estate market. I came back with some good takeaways, so I wanted to use this opportunity to brief you on what we learned. OVERVIEW
The market has been performing fairly well this year, but by no means will we see the record-breaking numbers we experienced in 2021, given the ebb and flow nature of these types of markets.
While we have seen nearly a 30% reduction in transactions this year, this hasn’t necessarily impacted demand.
Some of the factors that have contributed to this slowdown are inflation, increasing interest rates, recession talks, and the recent GDP report.
The significant wage increases being reported have not helped bump up consumer purchasing power due to inflation, which in fact, has actually reduced it. As a result, consumers are cutting back because of high prices.
The labor market does give us some hope in combating inflation, as it is at its strongest yet with more than 11 million jobs out there.
Many have lost a good amount of wealth in the stock market, preventing them from making purchases now, particularly in the new developments and high-end markets where buyers pay almost all cash.
On the bright side, New York is in the latter stage of recovery compared to the rest of the country. If we don’t encounter more COVID restrictions, we should hopefully see a boost in the second half of 2022.
Given the uncertainty of the midterm elections and potentially additional interest rate hikes, we’re advising clients to sell now rather than wait until the second half of the year, as the possibility of a moderate recession looms.
Demand continues to outpace supply, so we’re still in a seller’s market … at least for the moment.
As I’ve mentioned ad nauseam, pricing strategy is key in order to sell quickly; otherwise sellers run the risk of having their property sit on the market for months and ultimately face greater challenges later in the year.
Given the state of the rental market reaching all-time high monthly rates, some New Yorkers are strongly considering buying given the purchaser's monthly costs are most likely lower than rent.
Although interest rates have increased, they still remain historically low between 4 to 5%
Buyers looking at new developments should seriously consider buying this year; otherwise they could potentially see price increases as developers may need to compensate for construction costs that have gone up 30%.
Please reach out with any questions regarding the information we shared. This is merely a high-level summary but I certainly can provide more detail that will help you make an informed decision regarding your real estate needs.