The Q4 2022 Manhattan Residential Market Report was just released today, and I think our CEO Bess Freedman characterizes the 2022 market best … “a tale of two halves”. The first half of 2022 saw the highest volume of closings for that 6-month period since 2017, fueled by the robust market Manhattan enjoyed in 2021. By midyear, we began to see the market cool down for a variety of reasons, namely mortgage rates and an ailing stock market both spurred on by inflation.
Q4 closings were down 35 percent from the previous year, however it’s also important to remember that 2021 was a banner year for Manhattan real estate. Despite the decline, our CEO makes an astute observation that this past quarter’s closing volume was very similar to that of both the 2018 and 2019 fourth quarters. And not intended to discourage anyone—but rather set expectations—real estate is “going to be a little challenging in the first quarter and maybe into the second, but I think we’ll rebound and start picking up again,” Bess said to Mansion Global.
While Q4 saw the median price drop by 5.5 percent, inventory remained steady. If it continues this way with sellers holding off on listing, analysts predict prices could very well drop enough to attract buyers waiting for discounts. The luxury market, on the other hand, performed fairly well, experiencing a median price increase of 4 percent from the prior year and 21 percent greater than 2019’s fourth quarter.
The steep increase in interest rates also drove a higher volume of all-cash deals, which accounted for 55 percent of all Q4 transactions—the highest proportion, according to Jonathan Miller since his firm began tracking this trend. If over time we see inflation continue to dissipate, this may help lower mortgage rates, which could give the market that little boost it needs. I think Jonathan Miller sums things up nicely regarding what to expect for 2023 … it’s “going to be normalized, [and] certainly not a boom.”
As always, please reach out with any questions about the Brown Harris Stevens 2022 Q4 Manhattan Residential Market Report or any other questions you may have about your real estate needs.