NYC Real Estate Market Report – May 2022 Sales volume began to slow this month compared to last month. The total May signed contracts were 1,276 down 12% compared to April and 18% compared to last year. The 18% decline in annual signed contracts isn’t as bad as it sounds because last year was a record-breaking year. Overall May is proving to be a historically strong month. Condo sales fell annually for the fourth consecutive month. All price points experienced annual declines with sales over $2 million registering a 20% annual decline. The bright spot for sellers these days is that the average days on the market has dropped 30% from last year settling at 100 days.
Looking at the various neighborhoods, the less expensive markets such as the Financial District and Northern Manhattan experienced a boost. These neighborhoods lost their competitive advantage last year at this time when prices in core neighborhoods were more attractively priced than they are today. Now that the differential is back, buyers are seeking value in these neighborhoods.
Closed sales for the month were at 1,407 while 55 new listings were introduced to the market. The amount of new listings appears to be a low number overall compared to the amount sold until you look at the total inventory which hovers around 8,000. This amount is considered to be slightly more than eight months of supply which puts the market at equilibrium following a few weeks of being undersupplied. It is likely that the dip in inventory, which limited choice for buyers, coupled with rising mortgage rates dampened demand.
Studios gained popularity as Pied a Terre buyers returned to the market. These people chose to buy versus exposing themselves to the risk of ever-increasing rental prices. This is not surprising given the surge in rental prices going as high as a 34% increase in some neighborhoods while inflation has surged to over 8%. Mortgage rates this month surpassed 5% which was unthinkable a year ago when you could still get a jumbo loan for 3.5%.
As of last week, the average rate on a fixed 30-year fixed-rate loan was 5.25%. While this is still a historically low number it has caused buyers to pause. We are encouraging buyers to move ahead even at these rates because real estate is a great hedge against inflation. In some neighborhoods in Northern Manhattan there is a very reputable bank offering very low rates so ask me about them.
When looking at all the data it is important to remember that the Manhattan market is not overheated like the rest of the country. While institutional and individual investors are buying up homes across the country, there are very real barriers to entry in the Manhattan market. The first barrier is the high purchase price point. The national average house price is $375,000 whereas it is hard to find properties priced below $500,000 in New York City. The second hurdle is the preponderance of co-ops (approximately 70% of the overall resale housing stock) which have very strict rules and limitations on renting.
New York City is the most complicated residential real estate market in the country. Let us guide you to your success. At the Boland Team, we are experts in the sales, marketing and leasing of residential real estate in New York City from Tribeca to Harlem. We handle transactions for sellers, buyers, investors, renters, developers and referring brokers. Our unparalleled expertise in Northern Manhattan is widely recognized. Our full suite of services not only includes our brokerage and advisory services, but also access to world-class research, our national network of referral brokers and other ancillary real estate services.
Categories: Market Report