Is the New York City market up or down? The answer is, it depends. Some segments of the market did better than others in August but overall, it is a more normal market than we saw last year at this time.
August contract activity was up 16% compared to August 2019. Now why would I look at 2019 and not 2021? Because in 2020, when the rest of the housing markets across the United States were on fire, the New York City market flatlined. The city was closed from March to June and then slowly came back to life. All of the pent-up demand exploded into record breaking transaction volume in 2021.
If we compare August 2022 signed contracts to August 2021, they are down 26%, which might lead you to conclude that the market is doing poorly. If you are a buyer, you could expect much better pricing than is realistic. Looking to sell, do not assume this is a bad time; there are plenty of buyers in the market. Overall, the market is doing just fine as it returns to normal levels. In fact, the number of contracts signed in August bumped up by 8% when compared to the previous month.
Demand was moderated a few months ago in the sub $3 million market as buyers encountered increased mortgage rates. Despite the surge in borrowing costs, many buyers were incentivized to purchase anyway as the average rental price in NYC exceeded $5,000 for the very first time. When faced with the prospect of escalating rental prices, many buyers decided to jump into the market even with higher mortgage rates. Some buyers are getting good prices as sellers were slightly more negotiable with August recording a -2.2% negotiability factor. Of course, no one ever thinks they are getting a good price at the closing table, even when purchasing below the list price, but time and hindsight can make many of us feel like savvy buyers.
The average price per square foot also declined in August from a high of $1,896 last year to $1,714 this year. It is important to understand that part of the decrease is caused by a slowdown in the ultra-luxury sales market, which typically trades at a significantly higher price per square foot. Overall inventory levels in Manhattan ended the month at 6,519 active listings — a relatively balanced position.
Notable standouts in August in the year-over-year figures include the $3 – $5 million market, which slowed by 53% compared to last year against an average slowdown of 26%. Markets which show signs of improvement include the under $1-2 million sales range, slowing to only 20%. The Upper Manhattan Market slowed to only 11%. If you are curious about the Harlem market, you can always read my monthly Harlem Condo Report.