Lately I've been seeing first Open Houses flush with purchasers - who are also feeling rather flush after two years of saving and stock market growth - in search of a deal. This has been generating multiple bids on appropriately priced apartments given the dearth of available units. Similar to the supply chain issues impacting other areas of the economy there is simply not enough inventory for buyers who are eager to lock in some value on a home while inflation picks up. Prices are rising and astute buyers are stepping up to secure homes as the value of a dollar erodes.
What does that mean for prospective buyers? Well-priced homes are competitive now and using comparables from a year ago (or even six months ago) no longer has merit. Be prepared to pay more than the last person. This is definitely a change in tune relative to the messaging within this newsletter over the last several years. But I remind buyers that pricing is still discounted relative to the peak of the market back in 2016. Broadly due to inflation $1,000,000 from 2016 provides the same purchasing power as $1,161,000 today. But the median price of a Manhattan apartment today is still lower than it was back in 2016. Value signals are ringing when one can buy still-discounted NYC real estate with a 30 year mortgage rate just under 4% as inflation hits 7.5%.
When will we see more inventory? Contracts signed for the first month of 2022 ticked down from January 2021 as many sellers held out on listing their properties during the Omicron surge. The housing market is typically subject to seasonality so it can be expected that there will be an increase in inventory as the weather warms up. Key Takeaways
Mortgage rates are historically low at just under 4% but expect them to inch up in the coming months as the Federal Reserve looks to curb inflation.
The market has shifted in favor of sellers but prices aren't still back to their peak from years ago.
The housing mania that gripped most of the United States is still not quite in full bloom here in NYC - but buyers need to be better prepared.
Supply is down 30% compared to last year with only 5,033 listings on the market as of February 8, 2022.