Though mortgage rates have slid back toward 5%, a volatile stock market, fears of a recession, ongoing inflation and supply chain woes have all weighed heavily on condo sales. We are also seeing more travel than we have during the summer months since the pandemic started, resulting in a typical summer slowdown. Wealthier, less rate-sensitive buyers continued scooping up the most expensive condos, while most others stepped back. Nearly 20% of contracts last month were for homes asking more than $4 million, raising the median sale to $1.7 million, a 6% increase from July. While the sales market is shifting from a hot seller's market to a neutral market, the rental market still strongly favors landlords who have received nearly 30% increases, year over year.
Some items to consider as 2022 carries on:
Rental Market The average monthly rent for a Manhattan apartment surpassed $5,000 for the first time, with no end in sight. The average apartment rent in June was $5,058, the highest on record, according to a report from Miller Samuel. Average rental prices were up 29% over last year, while median rent was up by 25% to $4,050 a month. Aside from pricing out many renters, the increases could have broader inflation pressures. Rents are a key component of the government’s consumer price index, which increased 9.1% from a year ago in June, and New York is the nation’s largest rental market.
The continued price pressure in Manhattan rentals could add to higher inflation in the months ahead, and put more pressure on the Federal Reserve to raise rates in an attempt to tame prices.
Luxury Market 13 contracts were signed last week at $4 million and above in Manhattan, 11 fewer than the previous week- a sign that the peak weeks of summer are combating the luxury real estate market. Total volume was $95,243,000, the lowest since the week of October 12 2020. Out of the 13 contracts signed last week, ten were for condos, two were co-ops and one was for a townhouse. The median asking price was $6 million, and the units spent an average of 540 days on the market, with an average discount of 2 percent.
New Developments New development contract activity plummeted 30 percent last month, dipping below pre-pandemic levels for the first time all year. Developers reported 188 deals across the city, 37 percent fewer than in July 2019, according to a report by Marketproof. Manhattan developers reported 99 contracts worth $327.6 million, down about 40 percent from June. Ultra-luxe developments performed better than the rest of the pack, though, bringing Manhattan’s median price per square foot to $2,154, up 11 percent from the same period in 2019.
Mortgage Rates U.S. mortgage rates are tumbling even after the Federal Reserve hiked its benchmark interest rate by 75 basis points to start the month. This is still significantly higher than last year and many buyers are sitting on the sidelines waiting for a ‘price reset’. Demand for mortgages dropped to their lowest level in 22 years fueled by higher rates and recession fears.