Market Recap - November 2022

Sales

Manhattan - Crashing back…to normal? Yes. Overall new signed contracts declined annually for the past five months against heavy volume last year but expanded month-over-month in August. Conversely, new listings fell year over year for the past two months. The number of units available for sale at the beginning of September dropped 13%, contributing to a 16% decline in months’ supply to 4.4-months. The months’ supply for condos dropped 15% from last month, while co-ops decreased 17%. While all neighborhoods posted a decrease in months’ supply, the West Side and Downtown between 14th and 34th Street were the tightest at 3.5-months.

Brooklyn - Newly signed contracts declined annually for the past four months against heavy volume last year. The exception was with 1-3 family newly signed contracts that rose annually for the past two months. Overall new listings fell year over year for the past two months. Supply reverses and rises as the listing season kicks off. Negotiability steps higher, but still historically low.

Northwest Queens - Newly signed contracts fell yearly at the lowest rate since June of 2021 against the prior year’s sales surge. In addition, new listings have entered the market at a declining annual rate for the past three months.

Rentals… 

The record-setting median rent streak in Manhattan ended in August as prices began to plateau. Median rent and median net effective rent were the second-highest on record, ending a record-setting streak that began in February. The vacancy rate edged higher month-over- month for the fourth straight month. New leases rose month-over-month for the sixth consecutive month. The market share of one-year leases exceeds 50% for the first time since February 2021. Landlord concession market share for new developments was more than double existing rentals. Non-doorman rentals, representing roughly half the market, did not reach a record rent, unlike the doorman rental market. The market share of bidding wars accounted for one out of five new leases. Luxury net effective median rent rose annually to a new high as concessions fell to the third-lowest level on record. Luxury listing inventory was essentially unchanged from the prior year and well below pre-pandemic levels.

The number of new rental listings ticked up 1% last month for doorman buildings, and 3% for non-doorman buildings. New listings in doorman buildings were 9% higher than a year ago, while non-doorman listings fell 8%. While down from July, the average asking price rose sharply compared to August 2021 for both doorman and non-doorman buildings. The largest increase in asking rents over the past year was posted by three-bedroom and larger apartments.

The record-setting median rent streak in Brooklyn continued for the fourth consecutive quarter. Net effective median rent and median rent rose to new highs. Landlord concession market share continued to slide, reaching its lowest level in five and a half years. The market share of bidding wars accounted for one out of five new leases.

In Northwest Queens, net effective median rent reached the third-highest on record as the pace of price gains eased. Median and median net effective rent fell month-over-month from the prior month's records. Landlord concession market share continued to slide year over year. The market share of bidding wars accounted for nearly one out of four new leases.

Though looks like a bit of good news for those starting to look now for rentals…landlords have begun backing off of big rate hikes (both NYC and nationally). In New York, a report by landlord rating site Openigloo found the average rent hike on a renewed lease was 11.2 percent in July. That’s down over 2 percentage points from June and was the fifth straight monthly decline since peaking at 22.5 percent in February.

Mortgage Memo

This past week, the Federal Reserve raised the Fed Funds Rate by .75% and issued its quarterly economic projections. In response, home loan rates ticked up to a new 2022 high. The .75% rate hike lifts the Fed Funds Rate to a range of 3 to 3.25%, the highest since January 2008. This increase will affect short-term loans like credit cards, autos, and home equity lines of credit. The Fed expected the rate to increase to 3.4% back in June. Now, the Fed sees the Fed FundsRate at 4.4%. The Fed has never used the word recession to describe where the economy is or where we are headed, but reiterated that we will all feel economic pain because of their inflation-fighting efforts. Chairman Powell also said the chances for a soft landing are slim. The latest GDP reading out September 29th confirms the U.S. economy shrank for two straight quarters.

Bottom Line: The 10-yr Note yield closing above 3.50%, means we should not expect much or
any improvement in rates in the near term. The good news? It's not 1982!?

Mortgage Rates Courtesy of Wells Fargo*

7/6 ARM Jumbo - 4.875% (5.049% APR)

10/6 ARM Jumbo - 5.125% (5.169% APR)

30-yr fixed Jumbo - 5.375% (5.454% APR)

15-yr fixed Jumbo - 5.000% (5.192% APR)

*Rates released 9/26/2022 and are subject to change; purchase points applied

NYC 

Laws Affecting Your Wallet

If you live in a condo or coop, Local Law 97 is something your building’s Board of Directors should be aware of.  NYC's Local Law 97 requires large buildings to make significant reductions in their emissions by 2030. The law applies to all buildings over 25,000 square feet, and its goal is to help New York City meet its climate goals by reducing greenhouse gas emissions by 80% by 2050. The law is expected to cost all NYC building operators, including coops and condos billions. Here's what you need to know.
 

So, if Local Law 97 has you hangry, then brunch!  You need a place.  The ultimate guide to brunch and where to go from our friends at Resy.

National / International 

U.S. home sales dropped in July for the sixth straight month, the longest streak of declines in more than eight years – higher mortgage rates and a shortage of homes for sale are cooling this once red-hot market. The luxury market posted its biggest decline in a decade.

Sigh. Tired of all the hassles of living on land? Truly know no boundaries. Is it the metaverse? No. Is it cheaper than NYC? No. But, chopper back and forth to your luxury apartment at sea! Looks incredible from the concept mock-ups, but as we all know, the devil is in the details..