The State Of New York Real Estate In 2023

The real estate market in New York City reacted to the economic uncertainties of the first quarter of 2023 with a strong reaction. The Fed's 50 basis-point increase during December followed several 75-basis-point increases, causing many buyers to postpone their purchases. In January, mortgage rates rose, stock prices fell, and the transaction volume remained low. It then surprised everyone by improving in February and even further in March. The deals made were strongly correlated with price reductions and realistic listing prices. In 2023, there was no place for optimist pricing.

The market for high-end homes (those priced at over $10 million) suffered the most during this correction year. Few high-end properties sold in the first half of this year. Those with unique features or lucky buyers who found the perfect property. In order to sell their homes, owners who purchased between 2014 and 2015 had to take substantial losses.

Things have been different in the $4 to $10 million market. The Olshan Luxury Market Report reports every week contract activity for $4 million or more. It went from an average of 16 contracts per week to 25 in February and 32 in the first three weeks of March. Many luxurious properties with seven, eight, or nine bedrooms can remain on the market even after months. All it comes down to is price. Since January, half of the emails New York's agents received announced price cuts!

The city's most active real estate market is lower-priced units. Especially those that are priced below $2,500,000. Rents are still high, and the market is at its strongest point in recent history (even if it's a little weaker than six months ago). The properties priced at or below $2 million are those where the advantage of buying over renting is greater, particularly after taxes. Inventory remains low at this price level.

The New York stock market is experiencing increased activity as spring approaches, despite the disruptions caused by Silicon Valley Bank's and Signature Bank's collapse. The Fed's recent decision to raise the target rate only by 25 basis points, a repetition of the decision made in late January of this year, signals an end to much larger rate increases, such as those from.25% up to just below 5% over the past 12 months. The correlation between mortgage rates and the Fed rate is not perfect (mortgage interest rates are more affected by the bond markets). Still, the Fed rates have risen dramatically, causing a drop in buyer confidence. The artificially low mortgage rates that have been prevalent since 2008 are the norm, especially for young buyers. Historically, a 5% or even 6% mortgage is still low. This gradual acceptance of reality by the buyers is one factor that has allowed for the recovery in real estate.

It's difficult to predict what will happen in the year's second half due to several factors. While regional banks' fates remain uncertain, acquiring Credit Suisse and UBS shows this banking crisis isn't just an American problem. Inventory remains low in New York's many markets, with even cautious buyers finding that there is not much to choose from. The stock market may remain volatile, as will inflation. Both are expected to cool down over this year. The big price drops are behind us, and the property market has plateaued.

Great Time To Make A Deal In New York

More than 3.5 years since the closure of New York City and the start of the COVID-19 lockdown, Brooklyn's real-estate market is showing promise.

Bed Stuy has become like Fort Greene and Prospect Lefferts Gardens like Park Slope. Eating on Tompkins Avenue or Nostrand Avenue can reveal some of these results. For the first time in decades, Flatbush and East New York have begun to see signs of early change.

In contrast to the media coverage of New York's real estate market, which focuses on the high-end retail sector, Brooklyn has experienced a retail revival.

Rents and housing prices are rising dramatically. This is due to several factors.

Second, New York has not renewed its only tax break that made building housing for market-rate rents economically viable for investors and developers. This is called the 421A. Building without it is likely to be a loss-making proposition for investors.

New York is recovering, but it's still behind other coastal cities. The city had an unemployment rate of 5.9%, below the national average. Brooklyn has been a popular destination for individuals, and it could be a competitive market, as it still offers fewer costs than Miami or central Austin.

This leads to the obvious conclusion that there is no way to build more housing than to do so in large quantities.

Rates have certainly been rising. However, with the slowdown of deal-making since last year, if these conditions worsen the rental market in NYC, multifamily investors may be in a better position to take advantage.

Brooklyn's market is still booming despite a slowdown from March to February 2023. This was due to the highest interest rate increases in over 40 years. This is the hallmark of civilized world-class cities.

The State of New York must play its role and support Brooklyn if it wants to remain a winning Borough. This will keep Brooklyn vibrant and inclusive. It is the same for New York City and other U.S. municipalities. Everyone wins.