2021 was a record-breaking year for the New York City luxury real estate market. In fact, Manhattan had an impressive $30 Billion on sales last year. With each New Year we receive the golden question of “what’s in store for the year ahead?”. While we do not have a crystal ball, we do have some key themes based on last year’s activity that help inform how the landscape of the 2022 NYC Luxury Market may shape up. In short, while there may be some slowdown relative to 2021, we do not see any signs of the pandemic recovery stopping in 2022.
Heading into 2022, we expect continued strength across the housing market. The start to the new year has already been a strong one for Manhattan luxury, marking the best start to a year since 2006. The week between Christmas and New Year saw 22 contracts signed on properties priced $4M and up.
We expect the following themes to rise to the top: Rising Prices, Rising Rates, Rising Investment in New York.
Rising Prices:
Prices have already begun to recover in the New York market, particularly in the luxury sector. Strong demand and shrinking supply has been placing upward pressure on pricing. This is likely to continue as inventory shortages may increase in certain pockets of the market, and we expect to demand to remain persistent. Price appreciation may not be as rapid as the past year, but we expect an upward trajectory. Additionally, supply disruptions that have increased input and replacement costs are contributing to rising prices.
Turn-Key:
Stemming off of the last point above, whether looking to buy or looking for a New York City luxury apartment for rent we expect a strong preference to remain for turn-key or renovated units. Challenges with labor costs as well as sources furniture, etc. has made a renovation a much larger and time consuming project that many individuals no longer want to do.
Rising Rates:
The Fed has given a confident signal that multiple interest rates are nearly certain this year. The most recent guidance from the Fed signaled 3 rates for 2022. Buyers have been enjoying historically low interest rates for years, so the initial rate hikes may cause an upfront “shock” to the market. Savvy Buyers that have been contemplating purchasing are moving to lock in rates and make the purchase before rates rise.
Rising Investment in New York:
The city is incredibly excited to welcome a new Mayor and administration that has promised to shift the narrative of the city toward one of economic recovery and pro-business. A new Mayor could peak investors that were avoiding de Blasio’s New York. With the return of foreign buyers to New York City luxury real estate, rising inflation, and a strong rental market, we see a favorable environment for investors to consider New York for their investment.
