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  • Writer's pictureCorey Cohen

"Apartments are discounted by how much?"

Updated: Jan 23, 2023

Buyers have been surprised by the limited discounts on Manhattan apartments at just 5.5% year-over-year. There's inflation, international strife, higher mortgage rates, layoffs at Big Tech, and a lower equities market. All economic indicators are softening so why aren't real estate prices facing a deep decline like in 2008?

Not surprisingly, forces of supply and demand are at play. Pending sales are down significantly from last year but supply has also been constrained. There are simply fewer would-be sellers. Those who would sell to "trade up" in size are limited by what they can afford due to higher mortgage rates. So a growing family that purchased a home five years ago with a 4% mortgage is making due with what they have rather than listing and upgrading. Separately, those who have a lot of equity in their homes are waiting for market conditions to improve before listing their apartment and moving onto the next chapter. This is reflected in some movers putting their home on the rental market which is still commanding a premium relative to 2019.

I often remind clients that New York City purchasers typically have a minimum of 25% equity in their homes and they must reach a higher threshold than what's required by a bank in order to pass a cooperative board. Financially distressed Sellers are atypical. So even during the financial crisis of 2007-2008 Manhattan prices fell by just 10%.

Historically, when there are windows of discounting in Manhattan it's often a great opportunity to purchase - values hold and grow over the long-term even if it may not feel like a home run in the moment. The Streeteasy Price Index indicates there's still modest discounting relative to 2016 which is all the more substantive once inflation is taken into consideration. Today, all buying signals are present for those who can identify a home they love by a motivated seller ready to meet a lower bid.

Any questions on the real estate market? Know anyone on the move? I'd love to help and my number is 646.939.7375.



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