1st Half Results and 2nd Half Forecast for 2023

Here we go folks.  Half the year is behind us.  Let’s get ready for the rest of 2023.

Where to begin? 

With a slow start to the year, buying did pick up in the 2nd quarter but overall, the market remains sluggish compared to 2022. In Manhattan, the total number of contracts signed year-to-date is down 24% from the same time last year.  There were also fewer apartments on the market this year – 20% less than were listed at this point in 2022.

Despite that, there were some positives. The median sale price was up 10.5% in Manhattan compared to the second quarter but was down 2.8% from last year.  Also, the average days an apartment took to sell dropped to 67 days. That is 44 days (40%) less than it took in the 1st quarter but 36.7% longer that last year. 

Renovated, turnkey apartments are still seeing the most action and those sale prices have certainly been a factor in pushing up numbers.  With current mortgage rates hanging around 7%, it is not surprising to see some buyers reluctant to put additional liquidity toward renovating. 

If you are interested to know how your neighborhood fared, please review the 2Q2023 Manhattan Market Report HERE.

 

Looking ahead

Though there has generally been less trading activity in the Manhattan market recently, we haven’t moved away from historical seasonal trends. With that in mind, summer is typically slow. We are watching the Fed closely like everyone else. Activity will pick up when inventory increases. Will that happen in the fall? We have to wait and see.

 

Are Sellers Waiting?

Look at this chart. Currently 70.7% of U.S. mortgage borrowers enjoy interest rates under 4% and 91% have a rate under 5%. With today’s average mortgage rate around 7%, many property owners have been reluctant to give up their low rate. Who can blame them?

There will always be people who are experiencing a major life change (job loss, need more space, job transfer). These are the “need to sell” people. This inventory will come to market regardless of macro events. Then there is “everyone else” that we discuss above.  An improved macro environment will bring people from this group into the market.

Cooling inflation and strong employment numbers will continue to affect how the Fed thinks about additional interest rate hikes this year. Whichever direction mortgage rates go, it is likely to have a noticeable influence on the inventory as we move from summer to fall.

As always, please email or call with any questions.