Is NYC Now A Buyers Market?

The Weekly Recap

Good morning and welcome to Q3! June CPI report showed deflation for the first time since Covid, Manhattan’s rental market hits a new level of competitiveness, Jerome Powell testified in front of Congress, More democrats want Joe Biden to bow out of the Presidential race, JP Morgan may end free checking accounts, more than half of Manhattan homes are purchased with all cash and in a perfect example of government throwing away your money, NYC paid McKinsey $4 million to study the effectiveness of garbage cans.

Is NYC Now a Buyers Market?

There are two things that make a real estate market a buyers market. One is available inventory and two is the rate of absorption by the market of that inventory also known as the amount of months supply. Currently there are a little over 8,000 apartments for sale and 9.8 months of supply on the market. Meaning it would take almost 10 months to sell every home currently on the market with no new listings, based on the average number of transactions that happen monthly. Technically anything over a 6 months supply is considered a buyers market, indicating that supply is exceeding demand. NYC has also seen a 3% decrease from record highs in pricing where the average price now sits just above $2 million.

If you’re currently a buyer in this marketplace, it definitely feels like anything but a buyers market. Sellers that were eager to test the market in the first 4 months of the year were aggressive in their pricing strategies. That aggressiveness paid off for great apartments, but not for those that were unrealistic about the state of their homes. The number one reason why a home doesn’t sell is because of price. Sellers who have been overpriced over that timeframe who still need to sell are getting hit with the reality that its time to be flexible in their strategies.

Where buyers continued to get squeezed is in the limited amount of good inventory that hits the market that isn’t immediately absorbed by an all cash buyer. On top of that, those that are first time homebuyers, are still stuck in a rental market where even rental units are being subjected to bidding wars. As we move into the rest of July and August we can expect to see rental prices increase as well.

Conditions for buyers are definitely improving overall. With the optimistic CPI number released yesterday and jobs number earlier this week, rates have dropped 4 out of the last 5 weeks, making purchasing more affordable while giving markets confidence that we could see a rate cut from the Fed in September. In Q2, the Manhattan housing market saw more than 2,600 sales which is a 12% YoY increase as the average rent in the borough hovered around $5,000 a month.

I believe there is more of an equilibrium now between buyers and sellers than there was a few months ago, but it does not feel like the type of buyers market where you would think buyers have a large upper hand over sellers.

Market Performance

Here are how some other indexes and asset classes have performed as of Wednesday’s opening bell, markets were closed yesterday.

NYC Market Update

Here is a view of new inventory that has come onto the NYC market over the past week as well as newly signed contracts in Manhattan.

Mortgage Rate Update

For the fourth week in the last five, rates dropped again on the heels of June’s job report that showed a cooling labor market which led to the 10 year treasury yield decreasing.

News You Can Use

• US Inflation Broadly Cools, Likely Paving Way For Rate Cuts Bloomberg

• Here is the Inflation Breakdown for June in One Chart CNBC

• Powell Inches the Fed Closer to Cutting Rates Wall Street Journal

• Manhattan Renter Bidding Wars Hit Record High in Heated Market Bloomberg

• Powell Says Fed Will Cut Rates When Ready, Regardless of Political Calendar Reuters

• Case for September Rate Cut Builds After Slowing Jobs Data Wall Street Journal

• Powell Flags Rising Risks to Jobs While Avoiding Rate-Cut Timing Bloomberg

• US Treasury’s Yellen: Inflation Will Continue to Ease Over Time Reuters

• High Inflation Is No Longer Only Risk for US Economy Axios

• Powell Says Regulators Are Near a Revamped Bank-Capital Plan Bloomberg

• More than Half of Manhattan Homes Are Bought in All Cash Deals New York Post

• Biden Aides to Meet Senators After Pelosi Remarks Deal Blow Bloomberg

• NYC Rolling Out Its Own Official Trash Bin CBS

• NYC Penthouse Sells for $135 Million in Priciest Deal Since 2022 Bloomberg

The Deep Insight

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