The NYC Luxury Real Estate Market enters the second half of the year after a strong first half of 2022
We are officially halfway through 2022! The NYC market experienced additional records during the first half of 2022. As we enter the back half, market dynamics have begun to shift. While markets grapple with record high inflation and rising interest rates, signed contract activity has slowed and we have also seen an uptick in inventory. In the sales market, leverage is beginning to shift toward Buyers while the Rental market continues to remain highly competitive and hot.
The New York market has had a stellar past few years, but we have not seen the lofty price appreciation levels of 20%+ that some markets around the country experienced. Coming out of Covid, we saw elevated activity metrics, given the low amount of transactions that occurred throughout most of 2020. Additionally, inventory shortages are not new to the New York market.
Heading into the back half, the shift in pace and market dynamics can likely be viewed as a return to normal from the frenzied pace observed throughout 2021 and the beginning of 2022. Mixed economic signals have deterred some luxury buyers, but there are many that are still motivated by a deal. It is important to remember that most transactions in the Manhattan luxury market are cash transactions, so a softening of the market surfaces opportunities for these buyers.
Buyers flocked to luxury properties during the first half of 2022. Pricing will be key as we enter the back half.
Key Trends to Watch in the Second Half of 2022:
Consumer Sentiment: likely to remain uncertain until we see positive economic data as well as a turnaround in equity markets
Price Sensitivity: record high inflation that has raised prices across nearly every sector is weighing on consumer psychology…Buyers are motivated by a deal so accurate pricing will be key
Construction Costs: we do not anticipate that construction costs will drastically drop in the near future, so the opportunity cost of waiting is still something Buyers need to assess.
Rental Prices: rents rise in both economic booms and recessions so while a slight softening of activity in the white hot NYC rental market is reasonable, we do not expect prices to see a sharp decline.
In times like these, it is very important to partner with the right real estate professional that truly understands the local market - in New York, that can be as local as down to a specific building! Media headlines can often be misleading and inaccurate in the narrative they are telling - a professional is your best asset heading into the second half of the year!