William Timlen CPA works as a tax partner providing consulting and planning services within real estate. In the following article, William Timlen discusses the trends in New York City’s real estate market and how market movements and current developments are impacting the area.
Last year's real estate market was a two-sided affair in New York City. The year began in its highest state, with buyers signing
record numbers of contracts. However, once April rolled around, the market changed. By fall, it appeared that the best had become the worst. Many wonder how former events might impact the market this year.
William Timlen CPA reports that NYC closed 2022 without an air of urgency; neither sellers nor buyers were rushed, and the prices weren't collapsing. Such happenings (albeit rudderless occurrences) will certainly have irrefutable effects on the 2023 climate.
Looking Back to Look Forward
Understanding the ebbs and flows of the 2022 real estate market helps investors and other industry participants predict future impacts. Historical facts cannot be heavily relied upon to produce investment movements, but
history often rhymes (as the famous Mark Twain quote goes).
Buyers and Sellers
William Timlen CPA says that January 2022's pending sales number far exceeded previous years, as the spring buying season began at record highs. It appeared the momentum from the winter was carrying forward, with low interest rates buoying buyer enthusiasm.
When April came around, conforming rates crossed 5% and the market shifted down a gear or two. By summertime, it hadn’t recovered; volume fell from exceptional highs to normal levels, with buyer perception changing from recovery to normalization.
Fall's active season was decidedly inactive. The market was considerably lackluster — interest rates were high, and discounts were near non-existent, giving buyers no reason to rush.
As for sellers, they were lapping up the tight supply. The lower the inventory, the more star treatment their listing receives, giving them better ROIs and quicker sales.
That said, it also showed a lack of interest from potential sellers. After all, a sale is a prelude to a purchase for many, and with still-sticky prices, sellers would likely be downgraded, meaning there was no need for haste according to William Timlen.
Prices
Median resale prices per square foot for condos in the city indicated that last year sat with an overall slight decrease in average apartment prices.
William Timlen CPA reports that, following recent highs of $1,472 per square foot during the first half of the year, they fell to around $1,439 in the fall once the market shift manifested.
As for the fourth quarter, many thought prices would continue showing deterioration, but that wasn't quite the case. Data shows that prices weren't adversely affected by the drastic sales volume drop.
NYC's 2023 Trends
With the context in hand, experts move on to establish the current and potential developments in New York City's real estate market for 2023.
Rising Interest Rates, Lowering Inventory
February 2023 saw closed sales plummet by a dramatic 34.3% compared to 2022 when the market was busy. This drop marks the lowest closed sales number since the beginning of 2014.
According to William Timlen CPA, new listings were reduced by 15.8%, pending sales ticked down by 8.1%, and the median sales price in New York also dipped by 6.3%.
Future Forecasting
The area's housing market will likely continue to struggle throughout the year, thanks to the low home inventory and rising interest rates for buyers requiring mortgages.
That said, William Timlen CPA indicates that there is potential for declining interest rates, which would boost demand for real estate, raising home prices as a result. According to the National Association of Realtors, the coming months should see interest rates decline, reaching a more respectable 5% by December. Investors hope this decline will reinvigorate the market by making it easier for wannabe homeowners make a purchase.
Some data suggests that there are currently about 25,863 homes for sale in NYC. These figures indicate that the demand for homes is considerably weaker than the supply of abodes in the area. As for the time spent on the market, it's gone up since last month but hasn't reached last year's figures.
Despite that, William Timlen CPA maintains that New York City remains one of the best long-term real estate investment areas in the country. Over the last decade, some home prices have nearly doubled, giving exceptional ROIs. Plus, renters are still willing to pay more to avoid having roommates.
Overall, the market may not be quite as cheerful as it has been in previous years, but it still provides for an excellent long-term investment for portfolio diversification and more affluent home buyers.
