Mortgage rates just experienced the biggest one-week drop since December 2008. The average rate dropped from 5.7 percent to 5.3 percent, which is still significantly higher than the average 3.22 percent earlier this year. Recession fears seem to be the biggest driver leading to the sudden decline.
As inflation has kicked in, we’ve seen a spike in rates. What impact will this have on the residential market? We will have to wait and see. As I reported last week, more than half of purchases in Manhattan were all cash. In the luxury market alone, 96 percent of sales were all-cash transactions. With that said, it’s safe to assume most buyers are not necessarily impacted by the rate increases.
Nevertheless, sellers should be cognizant of the increasing economic uncertainty, as they price their homes. The market is still normalizing, as things level off, so pricing strategy and timing are key. This doesn’t necessarily mean dropping your price or discounting, but rather, keeping a keen eye on market activity. For now, analysts don’t expect prices to drop. And according to a recent report from Olshan Realty, Manhattan luxury home sales performed above average over the short holiday week, albeit still lower than the week prior.
Whether you’re looking to sell or buy, I highly recommend speaking with a real estate professional. A well, thought-out strategy should be in place that takes into consideration economic factors, timing and NYC market conditions. I am happy to jump on a call to answer any questions, with no obligation to work with me.