Although the housing market took a dip toward the end of quarter four last year, housing prices and rents remained frozen near record highs. Despite a plunge in demand due to rising interest rates, buyers didn’t have the negotiability they might have expected because inventory remained low.
Whether you plan on buying, selling, or renting, here’s what you need to know to achieve your real estate goals in New York this year.
Buyers & Sellers
If you’re a buyer hoping for prices to plunge this year, you’re going to be disappointed. It’s expected that buyers wanting a deal will remain stuck in wait-and-see mode for the first three to six months of the year.
Keep in mind, many buyers will wait for interest rates to come down, and competition will also rise. The smart buyer will be buying when no one else is. For those not loving the current interest rates, it could be more beneficial to buy now and refinance later versus waiting out the market.
For those of you ready to pull the trigger, lots of buyers are spooked so you do have the field to yourself. Fewer buyer means fewer bidding wars, so those ready to purchase will have less competition and more eager sellers willing to make small discounts to sell their homes – but, it’s New York City, so don’t expect any major price drops this year.
Buyers are in a wait-and-see mode, watching for what will happen to mortgage rates. With interest rates slightly improving, eventually, banks may bring down rates to attract new business, but it all depends on whether the Fed tackles inflation. Jonathan Miller from the Miller Samuel Report says, “lower inflation usually comes with lower borrowing costs and usually higher home sales.”
There’s an expected return of sales activity in the middle to end of the second quarter and a more normal second half of the year. However, pricing is not going to come down in the most in-demand areas. Many sellers who own second, or third, homes still won’t feel the pressure to lower prices.
John Walkup, the co-founder of real estate data analytics firm UrbanDigs, says the New York City market is essentially reverting to seasonally appropriate levels. “Sure, the market is slower with less deal volume and prices declining in tow, but the fact remains that units priced at the market are still trading in less than 30 days at their asking price.”
If you’re an all-cash buyer or an investor, the early part of 2023 will be the time to get a deal. With less competition, you’ll find sellers more negotiable.
For the rest, it’s predicted that interest rates will hold at the 4.5 to 5 percent range later this year, according to Melissa Cohn, regional vice president of William Raveis Mortgage.
After hitting new highs last spring and summer – Manhattan’s average rent passed $5,000 in June and the median rent hit $4,000 for the first time in May – rents closed out the end of the year still stuck near record highs.
Rents remained close to last summer’s all-time highs in part because many buyers who sold earlier in the year have been choosing to wait out the market cycle in a luxury rental instead of purchasing again. Since those buyers had a surplus of cash from a sale, they could afford higher rents for luxury apartments while they wait for interest rates to drop. In turn, this played a part in why renters saw widespread bidding wars for rentals during the warmer months.
However, if you’re a renter looking for a new apartment this year, expect a more normal experience in the next few months. Rents have stopped rising at dramatic rates and some experts think they may even slightly dip later in the year.
Now, bidding wars are few and far between, major concessions like offering free months’ rent are creeping up again, and rents are not being priced dramatically higher each month.
Whether you plan on buying, selling, or renting – or if you have questions about the current real estate market – reach out to Platinum Properties today to be connected with an agent that can help you.