January 2022 Market Overview

January 2022 Market Overview

  • Karp Dagan Team
  • 01/1/22

Happy New Year! While we wish we had a crystal ball to tell us what’s in store for 2022, we certainly don’t. One thing we do know is doomsayers were wrong and the city is back. We are likely in for a roller coaster ride but there are certain trends that we expect to emerge in the coming year:

  1. Investors will be even more active. Fueled by rising rental returns, extended tax benefits, as well as hedging inflation and reallocating funds out of record equity and crypto markets
  2. New York City will see inventory shortages witnessed in other parts of the US. This has appeared already in certain segments of our markets, especially the trophy properties that appeal to the super-wealthy who have seen their net worths swell over the past 24 months.  In most sectors of the market the inventory is being absorbed faster than it’s coming on the market.
  3. As inventory continues to shrink, prices will continue to rise. The second half of 2021 was recovery, 2022 home prices should continue to rise. 

Record Breaking 2021 Manhattan real estate posted its best year ever, rebounding from the pandemic with $30 billion in sales. The 16,000-plus signed contracts were also a record. The average price for an apartment in Manhattan is now $1.95 million. The median price — which many consider to be a more accurate indicator of the market — jumped 11% in the fourth quarter compared to the year-earlier period, close to pre-pandemic levels. The comeback has largely been driven by the top of the market — as ultra-wealthy buyers snap up penthouses and large full-floor units in new developments.

Eviction Moratorium On January 15th New York’s nearly two-year ban on evictions will likely come to an end.  When the latest extension of the moratorium lapses, owners will finally have a legal route to reclaim their property and an estimated $2 billion in back rent from nonpaying tenants. However, tenant advocates see the end of a moratorium as an opportunity to push through a permanent eviction protection that would also limit rent increases statewide. The bill would be an “exit ramp” for the moratorium and supplement the Tenant Safe Harbor Act, which lets tenants challenge an eviction over rent missed between March 2020 and Jan. 15, 2022, by claiming economic hardship. Landlords would still be able to win a monetary judgment though.

Luxury Market Manhattan’s luxury market started 2022 with a relative bang, counting 22 luxury contracts signed between Dec. 27 and Jan. 2.

Though it’s 20 fewer than the previous week, last week’s total marks the highest start of the year since Olshan Realty’s luxury market report launched in 2006. The previous record was 15 contracts signed in 2017.

Interest Rate Headwinds - One major wrinkle going into 2022 are interest rates worries. Mortgage applications have dropped 40% year over year and 30-year fixed mortgages are now 58 basis points higher than a year ago. Having said this, at the peak of the housing bubble in 2006, the 30-year fixed mortgage rate was at 6.76%. Today mortgage rates are still cut in half at 3.07%. 

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