Hi!
Q2 saw a major shift in the market with pricing and demand. Although Q1 ended in a very strong seller’s market, the momentum did not continue as several factors contributed to the sudden change in activity and pricing.
Here is what we observed during Q2:
- Factors contributing to the shift in the market were a sudden sharp rise in interest rates, a drop in stock prices, concern over war in Ukraine, fear of a possible recession, and a continuing pandemic.
- The slowing in the sales market was experienced in all categories, boroughs, and price points.
- Buyers’ purchasing power decreased due to a spike in interest rates and decrease value of their investment portfolios.
- Competitive bidding slowed as many potential buyers decided to hold off.
- Inventory grew in Manhattan by 20%, and the number of signed contracts fell. However, the number of days on the market remained the same which can be attributed to buyers rushing to lock in interest rates. Remember, current rates are still historically low.
- Properties that did not have accepted offers by the middle of May had to take price reductions of 5-10% in order to sell. While sellers who held to their asking prices found little interest from buyers.
- Rents continued to climb as inventory dropped. This trend shows no sign of slowing down anytime soon.
- The high rents have helped support the sales market to some extent. Even with the higher monthly costs resulting from increased interest rates, it can still be advantageous to buy vs. to rent especially with the potential of tax deductions and increase in home equity in the future.
- The luxury market ($4M+) decreased with 15 contracts signed, which is half the number for the previous quarter.
As always, feel free to reach out with any questions. The LivNY Team is here for you.
All the best,
