May 2023 Market Overview

May 2023 Market Overview

  • Karp Dagan Team
  • 05/1/23

JP Morgan’s acquisition of First Republic was the big headline of April. Fortunately, it is almost certain that this will not have a broad impact like the bankruptcy of Lehman Brothers had on the global economy in 2008. As it relates to the impact on our local markets, other lenders and mortgage originators including JP Morgan will ultimately fill the void left by First Republic so the impact should be minimal. However, the fact that a well-respected bank that supported our clients for decades is no longer solvent underscores that the Fed has most likely pushed rates too high too fast, which could lead to a pause and rate reductions sooner than some think. We do also expect that getting mortgages down the road will be more difficult.


Mortgage Rates To start May, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.50% from 6.55%. Mortgage applications to purchase a home dropped 2% last week compared with the previous week. The spread between conforming and jumbo mortgage rates narrowed again. Nationally, about 38% of owner-occupied housing homes have no mortgage, according to Census Bureau data. And about 27% of March US existing-home sales were purchased in cash.


Luxury Market 30 contracts were signed last week in Manhattan at $4 million and above, 3 more than the previous week. Condos outsold co-ops 20-7, with 1 condop, and 2 townhouses in the mix. Last week marked the 7th time this year that 30 or more contracts were signed, strong numbers. That being said,  this time last year 30 or more contracts were signed 14 times. Signed contracts for luxury apartments priced at $4 million and above, tumbled 38% compared to March. The $4 million and up segment logged its slowest month since December, with 23% fewer deals than in a typical April.


New Dev After a very active March, the new development market slowed in April. Sales volume and median prices both declined, while the luxury segment logged its worst month since the start of the year. Buyers signed contracts for 282 new development condos in April, down 19% compared to March, according to a Marketproof report. The slowdown was not enough to undo a relatively hot February and March: On a year-to-date basis, contracts are still up 8% compared to the pre-pandemic average. Sales volume fell 21% to $600 million, compared to $763 million in March 2023, while the median price for new condos slipped 7% to $1,581 per square foot.


Rental Market Over the last month, the average rental price in Manhattan increased by 1.30%, from $4,723 to $4,785. Year-over-year, the average rental price for a non-doorman studio increased by 5.41%, while the average rental price for a doorman studio increased by 4.78%. The average rental price for a non-doorman one-bedroom unit increased by 9.02%, while doorman one-bedroom units saw their average rental price increase by 0.80%. The average rental price for a non-doorman two-bedroom unit increased by 3.70%, while the average rental price for doorman two-bedroom units increased by 7.75%. Overall, the average rental price in Manhattan increased by 5.75% from this time last year.

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