My 2022 NYC Real Estate predictions are here! Do you love New Year’s predictions? In this video, I share the three trends I will be watching. They could predict the direction the market will take next year. If you are thinking of selling or buying in New York City this year, watch this video now.
Prediction #1: Rental prices will continue to rise. After two years of working from home, for many, it has become a way of life. While people more advanced in their careers are not typically required to come to the office, young graduates seeking mentorship need to be around their senior peers to grow. New York City vaccination rates are high and safety protocols are well established. This will support a return to offices which is likely to drive up rental prices even further. Just today I received an email from a broker in our office who was overwhelmed by inquiries for her rental listing, a Murray Hill studio. This is highly unusual as the winter months are typically very quiet for the rental market.
Prediction #2: Rising mortgage rates will not put downward pressure on pricing. This prediction is counterintuitive and I am going out on a limb here. An increase in mortgage rates typically makes properties less affordable and depresses pricing. An increase in mortgage rates impacts the market most strongly for properties priced below $2 million as that buyer is more price sensitive. Yet an increase in rents will drive cash pied-a-terre buyers and cash investors into the market, which could stabilize any potential downward pressure on pricing.
Prediction #3: Inventory levels will stay in balance or undersupplied. The great reshuffle is likely behind us. At the beginning of 2021 inventory levels were up around 11,000 units, well into oversupply territory. Now Manhattan is slightly undersupplied at approximately 5,900 homes for sale. I am not expecting New York City to experience the same inventory crisis other towns across the nation experienced. This is largely due to the comparatively robust new development inventory coming to the market. Bear in mind that this new inventory will come with appropriate, albeit more expensive price tags. If demand continues with the same strength we witnessed last year, without a substantial increase in inventory, we could see prices rise, especially in the luxury market.