October was a very busy month in the real estate markets in New York City, especially on the high end where a record number of contracts were signed with a notable volume priced above $10 million. The city is demonstrating yet again just how resilient it is. A city that was floundering during COVID, has soared back to life and now we are seeing real price recovery from a decline that started several years before COVID even struck.
As we approach the conclusion of 2021, optimism for a strong future will be driven not just by a new mayor.
- Foreign buyers are now allowed to travel back into the USA: they have been absent for a long time.
- Bonus season is approaching and the banks are showing very healthy figures.
- New York's economy is extremely diversified and its tech sector keeps expanding. Millions of square feet have been added by the tech community in the past 24 months and those higher-paid workers need to live somewhere.
- Covid appears to continue its decline, and hopefully, Winter does not produce another surge.
- Inventory is being absorbed at a strong, steady pace: we live in supply-demand markets.
- Interest rates remain low.
- Many are moving to - or returning to - New York, and yes while many have moved and/or retired, the next generation of New Yorkers is emerging.
Luxury Market 47 contracts were signed last week at $4 million and above in Manhattan, and 50 were signed the week before. It was the third time this year, 50 or more contracts were signed. The volume of $483,647,999 was the highest weekly total of the year and the highest since December 2013. The luxury market has been on a tear in October, racking up 184 contracts in the last 4 weeks at $4 million and above. Year to date, last week marked the 14th time 40 or more contracts were signed.
Borders Open Again After 21 months of pandemic border closures to foreign visitors, the White House announced that US borders will be reopening to fully vaccinated visitors on November 8th. During the closure, the purchase of US real estate by foreign buyers dropped by 31%. We expect to see a huge uptick to these figures.
Keeping Up With Inflation Annual inflation rose at its fastest pace in more than 30 years during September despite a decline in personal income. Headline price pressures as gauged by the personal consumption expenditures price index including food and energy increased 0.3% for the month, pushing the year-over-year gain to 4.4%. That’s the fastest pace since January 1991. Without food and energy costs, inflation rose 0.2% for the month and 3.6% for the 12-month period, unchanged from August but the highest since May 1991. Personal income declined 1% in September, more than the expected 0.4% drop. Consumer spending increased 0.6%.
One thing to think about, is that CPI does not include real estate prices. Also, married couples can exclude up to $500,000 in gains from capital-gains taxes. That figure hasn’t changed since a 1997 law, while the median home sale price has more than doubled since then. That's almost a quarter century without any adjustment for inflation.
Rates On The Rise The average 30-year-fixed mortgage rate continues to trend upwards, rising by five basis points to 3.14% for the week ending Oct. 28th.
