As expected in 2021Q3, there was no slow season in 2021Q4; instead, there was a tight supply of properties, rising home prices, and a surge in transaction volume. It is particularly noteworthy that the number of transactions in Q4 reached a record high in the past 32 years, despite the continued shortage of housing in 2021 Q2, Q3 and Q4.
The price of housing and rents will continue to rise based on current data, but the trend should begin to slow down.
Key Data Changes
Prices
- Median sales price + 11.0%
- Median new home price $2.224 million
- Median price of second homes 975,000
Months of Supply
- 7.8 month pace
Sales volume/volume
- +86.4%
Inventory
- Total Inventory – 25.0%
Days to market
- 37 days marketing time
Bargaining Power
- 1.1% (down from 7% to 5.9%)
Fourth quarter sales volume rose to the highest fourth quarter total in 32 years
The most significant drop in listings for sale in seven years was the largest drop in seven years, with the largest market share in bidding wars since the beginning of 2018
More than 70% of listings sold remained unchanged in price (no price reductions) during the marketing period
High-end real estate
High-end real estate continues to strengthen and has very strong volume
- Median sales prices were unchanged from the previous quarter, but significantly higher than the same period two years ago
- Total sales rose to the highest level in over a decade, almost doubling the previous year’s total
- Highest bidding rate in the past 5 years
- It’s worth noting that while prices have remained the same, the bargaining power has dropped significantly (from 8% to 6.7%)
New Homes
New homes are showing an interesting reverse trend, as new homes have been the main driver of home prices, but recently there have been more sales of small to medium sized, low to medium priced homes than large, high priced homes, resulting in a decline in the average sales price.
Because of the delay in new home planning, this trend may also be caused by developers planning more small units in the past two years to reduce risk.
Market share of new homes is at its highest in 2.5 years
Average sales size continues to be smaller, pulling down the overall price trend
Sales volume has nearly doubled from the same period two years ago
2022 Home Price Forecast
In my personal observation, the entire New York real estate market has shifted back to a seller’s market, with many of my buyer clients having to choose from a limited number of properties due to a shortage of properties and uncertainty and inflationary pressure on future prices.
Likewise, we are seeing the same problem in the rental market. Instead of the seasonal/peak season ebb and flow that we used to see in the New York housing market, the supply shortage continues and many tenants are being forced to move out or sign leases at 20% higher rents.
One theory I’ve read about the shortage of properties for sale is that many sellers are afraid to release their properties due to the rising interest rates in 2022, as they will face rising prices after selling their homes, giving up their current lower interest rates and only having higher interest rates if they buy in the future.
For this wave of increases, I would recommend that buyers choose a home with a high price/CP ratio as soon as possible, no matter what the price point is, from $1 million to $30 million. This is why the sales volume of many high-end second-hand properties is no less than that of new homes during this period.
For sellers, I suggest that if you want to sell, you can challenge the record high price or start with a 10-20% increase in the current price, the current shortage of properties is a rare opportunity for sellers.
For tenants, I suggest considering home ownership or moving out to lower priced areas. This wave of rent increases is still going on as of January 4, which is rare for the past 15 years, and will likely be even worse in April-June. For landlords, I suggest that they bring rents to market rates and that they do not relax their financial audits on tenants, especially after 2020, when New York landlords are quite powerless against bad tenants.
The above is the report of 2020Q4 housing prices. If you are interested in buying, selling, or renting, please feel free to contact us.
