2Q22 Manhattan Market Report | Too Early to Call

The second quarter of 2022 saw the Manhattan residential real estate market decelerate. Are we in the midst of typical late-Spring/ Summer downshifting or an actual market slowdown?

Certainly there are plentiful headwinds: the war in Ukraine causing supply chain issues and exacerbating inflation. An impending recession caused by higher interest rates impacting stock portfolios often used to invest in real estate. Increasing mortgage rates are eroding buyer purchasing power. Upcoming political shifts as midterm elections approach. A strong dollar dampening international interest. Uncertainty is the enemy to all markets, and we are in uncertain times.  

There are offsetting tailwinds: to start, tangible assets like real estate are great inflation hedges. Increasing layoffs may cause renewed employee appreciation for “facetime” at work, and this return to the office will provide a needed economic boost to New York City. Cash investors (approximately half of all NYC purchases) are enjoying leverage they haven’t had in years. The eventual realization that mortgage rates are still near historical lows and money is still relatively cheap. The international set returning as covid continues to abate and currency markets shift. And the rental market being out of control and swaying tenants to decide to finally start building their own equity instead of their landlord’s.

• Absorption still in seller territory at 5.3 mos; only Midtown 3BD+ co-ops in double-digits

• Asking rents are up an average of 39% while inventory is down 51%

• Average days on market: 158; average discount to last ask: 4%

 Hence our hesitation to make a final call, yet. Stay tuned.