NYC Real Estate in February 2023

As we are heading into a busy spring market, let's take a look at real estate trends and what they mean for buyers, sellers, and renters in New York City.

Entering season with low inventory

• As mortgage rates were rising in 2022, many sellers went on hold because, once they sell and become buyers, they will be dealing with a higher mortgage rate. 
• Many potential buyers opted in for rentals, which resulted in lower deal volume and increased rents.
• Monthly closed sales volume in Jan 2023 was 55.4% lower than in Jan 2022. 
• This was expected because the market was correcting itself after 2021 peaks.  
• Why this is important: we need to compare 2023 to pre-pandemic levels and trends. 

Sale prices are similar to pre-pandemic levels

• Higher rates are always aimed to lower the prices. Prices are lower 6-10% than last year but they are similar or even higher than pre-pandemic levels.
• Current market absorption rate is 4.5 month in Manhattan. It means if we don't release any new inventory on the market but keep current demand, we will sell all the available units in 4.5 month. This is low number and a good motivation for sellers to list on the market.

Luxury sector ($4m+) in the buyers' zone

• The chart below clearly indicates the cycles. Bad seasons are offset by the good ones. Blue bars below are the deal volume. Black line on top of them indicates the bottoms/highs. When the curve forms the bottom (like it does in Jan 2023), it often signals the bottom and a trend towards sellers' market. 
• As of the moment, we are in a powerful BUYER market with lots of perks in negotiations. This may change soon, especially since we are entering busy season. 
• SELLERS: price right initially so you will have great chances to attract more buyers with bids. 

Mortgage rates predictions

• The average 30-year fixed rate fell from 6.13% to 6.09% on February 2.
• Fed anticipates ongoing increases until inflation reaches 5.25% to 5.5%. Currently it is at 6.5% level.
• There will be more rate hikes in 2023 but experts think we had the peak in 2022 and should not panic.
• The goal of rate increases is to slow down the economy so it naturally fixes the inflation. The economy is currently strong. We have higher GDP than expected and unemployment rate is very low. There are 2 job openings for 1 unemployed.  
• Freddie Mac: Forecasts the average 30-year mortgage to start at 6.6% in Q1 2023 and end at 6.2% in Q4 2023.
• Mortgage Bankers Association (MBA):'Long-term rates have already peaked. We expect that 30-year mortgage rates will end 2023 at 5.2%.'

​2008 vs 2023-24 for Real Estate

• NYC homeowners are on stronger financial footing compared to the 2008 crisis.  
• The mortgage delinquency rate in New York state was 2.7% in September of this year, in line with the historically low national rate of 2.8%, according to the latest Black Knight Mortgage Report.  
• Only 0.4% of borrowers in the greater NYC area are in negative equity positions, meaning NYC homeowners are well prepared to withstand a possible economic downturn ahead.

​Rents in NYC stay higher than pre-pandemic

• Even though Manhattan median rent declined and is now $3,976, it is still 17.2% percent higher compared to a year ago.
• Brooklyn rents grew 18.3% compared to last year. Median rent is $3250. 
• Luxury rents reached record highs during 2021 and then declined  4.3% to $11,000 in December 2022. This is still third highest record for the past 10 years.  ​

​Takeaways

• SELLERS: price right to be competitive on the market. If after the sale you are planning to buy, you will have more power to negotiate your best deal. There will be more demand and with active strategy you will be able to net more in this shifting market. 
• BUYERS: there are plenty of amazing mortgage programs and solutions for your financing. With rent hikes, buying option is very attractive. As you may have heard: you marry the apartment but you are dating the rate. Refinancing option is always available. There are great programs for the first time home buyers in opportunity zones in Manhattan that might also attract you.

Please reach out with any questions, comments, mortgage specialists suggestions, local reports for your desired neighborhoods, or free pricing report for your apartment.  

About the author:




Alena Sakovich
Licensed Real Estate Agent
Certified Negotiation Expert
R New York
Mobile: 917.930.9925
Email: [email protected]