What Is The NYC Home Buying Market Really Like?

The Weekly Recap

The US housing market declined by $2.3 trillion in the second half of 2022, US home sales declined for a 12th straight month, mortgage applications are their lowest level since 1995 and rates are up for the third straight week (read my next section), Flood zones are fearing US property prices are overvalued up to $237 billion. Fed minutes revealed the need for further rate hikes to curb inflation although the vast majority of our Fed official overlords did support slowing the pace of US interest rates. US 10Y Treasury yield hit a three-month high. Second estimation of Q4 GDP revisions were revised lower on weaker consumer spending and lower than the Q3 final. It has been 1 2 3 4 5 6 7 days since the US last shot down a balloon, whether from a child's birthday party or China remains to be seen.

What Is the NYC Home Buying Market Really Like?

Economic indicators and national news stories tell only a broad overview of the housing market. I always like to say that when it comes to real estate, we are really competing with information that comes from FOUR different types of markets:

National Market: Most news that we're exposed to on television is an aggregate of national information and trends as to appeal to the widest possible television audience. What happens in Scottsdale Arizona, or Boise Idaho, or Detroit Michigan or Nashville Tennessee, does not impact what happens here in NYC.

Local Market: This market deals with the more granular area of a regional environment such as Manhattan or the Hamptons.

Neighborhood Market: This deals with segments within the local market. How does SoHo compare against the West Village, Upper West Side versus Murray Hill, Southampton against Water Mill where is there more value and which markets are out competing others.

Building Market: This is a fun one that most people do not think about it. Some buildings sell much better than others and the best comps for units are those found directly in the buildings people are buying and selling. There are buildings that outperform the neighborhoods they are in that might also outperform the entire local market.

Why is all of this important? Because the news of mortgage applications being at their lowest in 28 years, declines in the US housing market value and interest rate increases are designed to create fear and uncertainty where in reality NYC and the Hamptons have three things that no other market is. They have an unparalleled track record of appreciation, they are a flight to quality and they are a safe haven of capital for international buyers and investors.

SOME GREAT DATA POINTS: Data points so great they needed to be in all caps and bold. Over the past month signed contracts have increased 77% in Manhattan with a 69% increase in new inventory. Brooklyn saw similar growth with an increase of 67% in contracts signed with a 28% increase in new inventory. If the national market is struggling, focus on the only data points that matter, points that inform whats happening in your neck of the woods.

Market Performance

Here are how some other asset classes performed this week as of this mornings opening bell.

Mortgage Rate Update

The economy continues to show strength, and interest rates are repricing to account for the stronger than expected growth, tight labor market and the threat of sticky inflation. As rate dispersion increases with an increase in rates, homebuyers are able to save a bit of money by shopping among lenders for a better rate.

News You Can Use

• US Fourth Quarter GDP Revised Down Bloomberg

• Fed Minutes Show Openness to Higher Rates Endgame Reuters

• US Housing Market Posts $2.3 Trillion Drop Bloomberg

• Mortgage Applications Plummet As Rates Jump Axios

• US Mortgage Rates Raise for Third Straight Week Bloomberg

• Jamie Dimon Believes The Fed 'Lost a Little Bit of Control on Inflation' CNBC

• Inflation is Still Hitting Certain States Particularly Hard YF

• US Fourth Quarter GDP Revised Lower Due to Weakened Consumer Spending Bloomberg

• Fed Minutes Indicate Members Resolved to Keep Fighting Inflation with Rate Hikes CNBC

• US Home Sales Fall for 12th Straight Month WSJ

• Climate Change Real Estate Bubble Risks Billions Axios

• How Wall Street bought Thousands of Single Family Homes and What that Means for Rental Prices CNBC

• Bond Yields Keep on Rising Axios

• Economic Forecasts Are Getting Revised Up, And People Aren't Thrilled About It YF

The Deep Insight

Puppy of the Week

The puppy of the week this week is a cat! Meet Murray. Murray Cheddar Peaches is the Pumpkin Spice Ginger Cat. To celebrate his upcoming twelfth birthday, Murray's parents presented him with the gift of oral health and sent him to the vet to get a molar extracted. Once he got home, he derped around the apartment in a cloud of oblivion, which is not much different than his default behavior. Bask in the orange tabby glory that is Murray! Follow @murraycheddar for daily updates.

Contact Me

Feel free to reach out to discuss more in-depth about your real estate goals, share your thoughts about my newsletter, or lobby me to have your dog featured as the dog of the week in my monthly newsletter. Looking forward to hearing from you!