So How Is the NYC Real Estate Market Doing?

The Weekly Recap

It’s almost pumpkin spice szn, our Fed overlords are meeting in Jackson Hole today, determining our fates. Sales of new construction homes continuing to outpace existing home sales. Manhattan is now the most expensive place to live in the US. NYC is cracking down on Airbnb’s short term rentals all over the city, American’s have been traveling like crazy with the industry expected to pull in $15.5 Trillion, and the iPhone 15 might have a new charging port which will infuriate everyone as Apple continues their money grabbing strategy of strategic obsolescense.

So How’s The NYC Real Estate Market Doing?

Real Estate markets, especially ones like NYC where the market is consistently dynamic, is always hard to keep a finger on the pulse of without misdiagnosing the conditions and passing judgment on the market. First and foremost, NYC is different from every other market for three reasons. One, we have an unparalleled track record of appreciation, two, we are safe haven of capital and three, we are a flight to quality for international buyers/investors. Where everyone else is doom and gloom and the news makes rising rates to be the worst thing that’s ever happened, NYC is still a healthy and vibrant residential space.

The Rental Market- continues to be one of the most aggressive and dynamic rental markets I’ve seen in my career. It seems like every month, NYC hits a new record for average and median price point for apartments. The rental market competition is being driven by first time homebuyers not buying homes but remaining in the rental market. Supply continues to be low with high demand pushing prices further up. The one constant regardless of market dynamics is that rent continues to be the single largest net outflow of capital for any individual.

The Buyers Market- its a tricky one as numerous data points show its a sellers market out there but owning real estate, an asset class responsible for 80% of global wealth, is one of the safest investments you can make. Although rates have nearly doubled in a 12 month period, the amount of transactions in both Manhattan and Brooklyn have remained the exact same YoY. Buyers that are activating in the market know that high rates are temporary and that re-financing is always an option. Outside of a 30 year mortgage, there are other products that can immediately lower your rate like 7/1 ARMs that can help you being to create equity for yourself, paying your own mortgage, rather than someone else’s through renting. Cash, as always, continues to be king with cash purchases accounting for more than 53% of all purchases.

The Sellers Market- As mentioned above, we’re trending in a sellers market as low inventory and increased buyer demand gives correctly priced sellers, an advantage in the market place. Anything thats priced reasonably and is in good condition will move as most sellers feel their biggest asset isn’t their home, but the mortgage rate for which they purchased it which is keeping them from coming to market and staying on the sidelines. To give up a 3% rate to buy in an environment that is twice as high, is a tough pill to swallow. But even in high rate environments, life still moves forward and life events like switching jobs, moving to a new state, a new addition to the family etc, forces people to move onto their next adventure and out their homes on the market.

Market Performance

Here are how some other indexes and asset classes have performed as of this mornings opening bell.

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

This week, the 30-year fixed-rate mortgage reached its highest level since 2001 and indications of ongoing economic strength will likely continue to keep upward pressure on rates in the short-term. As rates remain high and supply of unsold homes woefully low, incoming data shows that existing home sales continue to fall. However, there are slightly more new homes available, and sales of these new homes continue to rise, helping provide modest relief to the unyielding housing inventory predicament.

News You Can Use

• All Eyes on Fed Chief Powell in Jackson Hole Bloomberg

• Airbnb Hosts and Guests Scramble as New York Begins Crackdown New York Times

• Tale of Two Housing Markets Axios

• The Next Phase of the Fed’s Historic Inflation Fight is Waiting for Rate Cuts CNN

• Powell’s Pivotal Speech Friday Could See a Marked Shift From What He Has Done in the Past CNBC

• Fed Officials See Rates Close to Peak, Differ on How Close Bloomberg

• Mortgage Rates Hit Their Highest Point Since 2000 CNBC

• Banks Don’t Love Rich Mortgage Borrowers Wall Street Journal

• Fed Can’t Celebrate Yet as Investor Expect Rates, Inflation to Remain Elevated Bloomberg

• Manhattan Has the Highest Cost of Living in the US CNBC

• Two Regional Fed Boards Sought to Hold Discount Rate in July Bloomberg

• Morgan Stanley Sees Mood on US Stocks Souring, Goldman Disagrees Yahoo Finance

• US Existing-Home Sales Slide on Higher Rates, Lean Inventory Bloomberg

• Many Family Offices Suffer from “Group Think” Investing CNBC

The Deep Insight

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