The NYC Real Estate Market Continues to Be An Outlier

The Weekly Recap

Recession is no longer the consensus with many economists turning optimistic and saying the Fed’s rate hikes are done although Jerome Powell maintains a pause in hikes he hasn’t committed to not raising them again, long-term treasury yields hit a 16-year high at almost 5%, bank earnings and profits are moving on up, retail sales continue to boom with holiday spending expected to be up 14% this year. Nationally home sales are on track for their slowest year since 2010 as NYC bucks that trend, Delta walked back their changes to its SkyClub access and the house of representatives still doesn’t have a speaker.

NYC Real Estate Market Continues to Be An Outlier

As real estate markets nationally continue to see downward trends in mortgage applications and home sales, NYC continues to be an outlier. The three major things that separate NYC from other markets is our Track Record of Appreciation, that we are a Flight to Quality and we are a Safe Haven of Capital for international buyers/investors which makes this market incredibly appealing even in tough economic conditions.

New York’s market slowdown heading into the fall will be milder than what is happening nationwide as inventory continues to keep prices elevated with almost 9% fewer homes coming into the sales market than a year ago. With the pricing of NYC apartments attracting high net worth individuals who are not as likely to be deterred by rising interest rates, the citywide median asking price jumped almost 12% YoY in September to just under $1.1 million which is triple the national market.

Even with Jerome Powell confirming that rate hikes will continue to remain paused, the resiliency of the US labor market indicates that rates could continue to creep up. Although its uncertain where the peak of rates will be, there is no reason to expect that rates drop below 6% anytime soon.

Sellers continue to be uniquely positioned that if they are priced correctly, they can still sell their homes within 45-60 days and even at a slight premium with inventory levels remaining where they are. Downward pressures from rising rates may put some buyers on the sideline or reduce their purchase power but with real estate being an asset class responsible for 80% of global wealth and rents continuing to be high and the single largest net outflow of capital, those that want to move from renter status to homeowner are still smartly making the move.

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. A stark difference week over week.

Mortgage Rate Update

Mortgage rates continued to approach 8% this week. In this environment, it’s important that borrowers shop rates with multiple lenders for the best possible product. Homebuilders are also feeling the pressure of rising rates as incoming data shows that the construction of new homes rebounded in September but as rates keep rising, builders appear to be losing confidence. Construction could trend down in the short term as a result.

News You Can Use

• A Recession Is No Longer the Consensus Wall Street Journal

• Powell Says Future Rate Hikes Will Be On Hold Bloomberg

• Investors Are Confident They Can Roll With Global Trade’s Punches Bloomberg

• Sour and Sweet Rate Hikes: Why the Fed Has a '“Lemonhead” Problem Axios

• Treasury Yields Climb Above 4.9% Wall Street Journal

• Wall Street Concerns Over Swelling US Debt Put Fed in Tight Spot Bloomberg

• Why You Should Carefully Consider What Jamie Dimon Just Told the Investing World Yahoo Finance

• Home Sales Slide to Slowest Pace Since 2010 Wall Street Journal

• Retails Sales Rose in September, Much Stronger Than Estimate CNBC

• Home Sales on Track for Slowest Year Since Housing Bust Wall Street Journal

• Household Net Worth Surged After the Pandemic Hit Wall Street Journal

• Fed’s Waller Wants Central Bank to ‘Wait’ Before Deciding on More Rate Hikes Yahoo Finance

• Delta Walks Back Changes to SkyClub Access, Loyalty Program Axios

The Deep Insight

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