Posted by Wei Min Tan on November 17, 2022
November 2022 Manhattan Real Estate Market Update
Increase in the 30-year mortgage rate from the beginning of 2021 until now.
Key point #1: Sales remain weak due to mortgage rates
The The Federal Reserve raised interest rates by 0.75 percentage points for the fourth time this year. October inflation rate slowed to 7.7%, compared to 8.2% in September. The stock market welcomed the news, but we are still expecting another rate hike in December, this time by 0.50 percentage points.
Along with rising interest rates, mortgage rates are at their highest level in 20 years. The average The 30-year mortgage is now above 7%. This translates to a dramatic decrease in the number of buyers, as 50% of Manhattan buyers require a mortgage. New contracts signed in October 2022 were 60% lower than a year ago.
Read Wei Min’s article: How Inflation Affects Manhattan Property
Key Point #2: Buyer’s Market
We are in a buyer’s market. The last buyer’s market was just after the Covid reopening in the second half of 2020. About 50% of Manhattan buyers need mortgage financing, and this segment has shifted away from buying. Naturally because the monthly mortgage payment has increased dramatically.
Cash buyers currently have significant leverage to negotiate a good deal. I expect Manhattan prices to drop 5-10% starting in the second quarter of 2022. For new properties, developers are again offering price and term concessions.
Read Wei Min’s article: Top 5 Mistakes to Avoid When Investing in New York Real Estate
We are in a buyer’s market, indicated by the red circles, the previous buyer’s market was in 2020.
Key point #3: Slowdown in the rental market
The rental market has started to slow after several months of double-digit price increases. Driven by high inflation which has led to an increase in rental prices, many tenants are opting for the simple renewal of their current leases, in order to avoid the costs associated with moving (brokerage fees, pension package, moving costs).
Also, we are now in the slowest rental season due to Christmas and winter. We are seeing more and more condo owners paying brokerage fees. The last time this happened was during the Covid pandemic.
Read Wei Min’s article: Average apartment prices in Manhattan, New York
What we do
We focus on of global investors buy condos in Manhattan for portfolio diversification and long-term return on investment.
1) Identify the right purchase according to the objectives
2) Manage the buying process
3) Rent the property
4) Manage tenants
5) Market the property during the eventual sale