The downswing of New York’s real estate market has been the much-documented tale of 2018: prices in many segments fell, rental and new development concessions increased, and listings are sitting on the market for longer. This can be attributed to market uncertainty, especially in the equity markets and politics. As each week goes by, more unknowns are being answered and putting consumers in a better position to plan for the future.
ULTRA LUXURY IS ON FIRE An oversupply of product has led to slowdown in New York’s luxury real estate market, but sales of “ultra-prime” properties are continuing to climb. Bloomberg reported that 153 properties in six cities worldwide sold at an average $43 million a house, or a total of $6.6 billion. Over the past year, 39 residential sales in New York were valued over $25 million, totaling $1.5 billion.
These figures are in total contrast to the rest of the city’s residential market, which saw an 8% decrease, year-over-year, in overall transaction value in the second quarter. Other cities that made the cut are Hong Kong, London, Los Angeles, and Singapore.
INTEREST RATE RELIEF The average contract interest rate for a 30-year fixed-rate mortgage decreased to 4.96% last week, the lowest level since September and the largest single week rate drop in over a year. This lead to a 1.6% increase in mortgage applications. Traditionally December is a slow month for housing but this is pointing towards a busy month for mortgage brokers. Mortgage volume is still down 16% from one year ago.
Mortgage applications to refinance a home loan increased 2% last week but were still 34% than a year ago, when interest rates were 72 basis points lower. While refinances are highly sensitive to weekly rate moves, millions of borrowers have already refinanced to record-low interest rates in the past few years, so the pool of potential refinancers is relatively small right now.
WAGES INCREASE BUT NOT AS MUCH AS HOUSING The total net worth of U.S. households rose by 1.9% or $2.07 trillion in the third quarter of 2018 to $109.04 trillion, as higher property values and stock prices boosted the wealth of Americans. These figures released by the Federal Reserve are before the 4th quarter equity market swoon. Household debt also increased at a 3.4% seasonally adjusted annual rate, up from a 2.9% rate in the second quarter.
Although the New York City market is softening, tThere are 400,000+ more U.S. homes valued at $1 million or more in 2018, the largest annual rise since the housing price recovery began in 2012. Slightly more than 3 million homes nationally, or 3.6% of the total, are worth at least $1 million, up from 3.1% last year and 1.5% in 2012. That means 96.4% of US homes are priced under $1million..... 29 cities and towns joined those with a median home value of $1 million or more this year, bringing the total to 201. Nineteen municipalities joined the million-dollar club last year.
We hope you and your families have a very happy holiday season and we’ll see you in 2019!