According to an article in The New York Times, one silver lining from the pandemic was the substantial amount of wealth it created for homeowners. Approximately 65 percent of American households saw home appreciation driven up at record pace due to low inventory and burgeoning demand. This translated into a gain for them of more than $6 trillion in housing wealth over the course of two years.
It’s extraordinary to see something like this happen. In fact, Benjamin Keys, a professor at Wharton School of Business said he “really struggles to come up with a parallel to this.” It’s quite rare to see so many people gain this level of wealth in a short period of time. However it is important to point out that owners of luxury high-end homes saw the largest total gains.
Nevertheless it’s clear that real estate is always a smart investment, especially in New York. As I mentioned last week, rents are through the ceiling and continue to push the needle to all-record highs, which is driving some to buy. Even as interest rates climb, the market continues to fare well, the luxury segment in particular; although not as good as in 2021 when we were seeing a number of records broken.
Also worth noting as Donna Olshan of Olshan Realty points out, there are a number of economic uncertainties with inflation, the unpredictability of the stock market and the Ukraine crisis that could be a turning point for the housing market. Clearly “timing is everything”. At some point the record-breaking numbers we’ve seen over the past two years will be in our rearview mirror, as things slowly regress to normal. However, Shimon Shkury, President of Ariel Property Advisors expects demand for free-market and luxury apartments in the city to keep pushing forward in the short-term as inflation drives rent up higher.
If high rents have had you seriously considering buying, please reach out. While every market has its ebb and flow, in the end, real estate is one of the safer investments that in some instances like cited above, result in a windfall.