In uncertain times, when world events and macro outlooks are dire, there’s no better urban center to invest in than New York City. Our residential market is leveling to be sure, but we’re holding our own. In fact, there’s opportunity, and smart home shoppers are buying.
What are we seeing?
● September is traditionally a low volume month for transactions, followed usually by an uptick in October. Instead, deal volume this month has been sluggish though holding steady. With fewer purchasers, there’s less competition, so the pace of trading has slowed, and buyers can take their time to evaluate their options, consider their bids and shop for the best mortgage product and terms if they are financing.
● Inventory has been trending down since the summer seasonal decline. There are at least two reasons for the prevailing low housing stock. Sellers are reluctant to give up low interest rates of previous mortgages, and unless they have a compelling need to sell, they are backing off in a shifting climate.
● Entry level purchasers, the most sensitive to the Fed’s three successive rate hikes, are pausing to recalculate what they can afford to spend, and many are renewing their high priced rental leases--even though spending money on rent fails to build equity. Rental prices are likely to trend down as we move to winter when rents tend to dip and activity declines.
● It makes good business sense to follow the rationale “You-marry-the-property-but-date-the-rate” if your purchase time horizon is at least 5-7 years. Go for the adjustable arm now, and look to refinance down the road with a fixed rate.
● Once the Fed signals an end to rate increases, pent up demand will flood the market, stimulating renewed competition, and you’ll lose today’s buy side leverage.
● Manhattan prices didn’t accelerate post Covid as they did in overheated markets like Westchester, the Hamptons, Greenwich and Miami. So while values may flatten in some segments of our market, they are not expected to tank.
● Commodity products that are interchangeable with other properties in fair condition are struggling and need to be priced accordingly to stand out. Conversely, there’s always a market for quality inventory that’s well located, realistically priced and in excellent condition.
● A choppy economy with rising mortgage interest rates and prolonged stocks and bonds volatility impacted luxury sales, especially during the three weeks from September 19 to October 3 when contracts signed for properties priced at $4M+ slipped to 16, 14 and 12 weekly, but then rebounded during the week of October 10 with 24 deals inked, and last week 30 contracts were signed, the highest number since the week of May 9 when 39 luxury properties went to contract. As prices fall away from the exuberant highs of 2021, buyers are seizing value.
