The spring buying season is just around the corner and with increased demand and fewer listings on the market, it will be a very competitive season for potential buyers.
My View and Summary
The New York housing market continues to be quite active, with a burst of buyer demand over the past 2 years over the past 8 months. While interest rates have had a dampening effect on housing prices across the U.S., the rise in interest rates means the U.S. dollar will climb, and international hot money is choosing low-risk, relatively low-priced New York City real estate in an uncertain global environment. This, coupled with inflation, the return of the boom, the elimination of work-at-home jobs for large corporations, and the demand for housing for New York’s college students, will likely lead to a continued rise in New York City real estate.
What I am seeing now: Many buyers are considering renting, but after seeing recent rents and housing conditions, they are deciding that buying is a better deal. The bidding in NYC is intense and there is little or no room for price reductions. On Long Island, it is very common to see price increases in the under $3 million market, and not many discounts above $3 million, with many sellers believing their prices are in line with market trends. As the Fed has raised interest rates, sellers are asking buyers to waive their mortgage contingency.
The good news is that inventory is recovering in the market, which should take some of the pressure off of home buyers.
In February, 4,078 sellers in New York City listed their homes on the market. This is the highest number of new listings listed in any February on StreetEasy’s records – a sign that the market is still bouncing back from the pandemic recovery and that these sellers finally feel the time is right to sell after two years.
The previous high was in February 2018, when 3,538 homes entered the market.
- Inventory of sales is up, but still below last year’s levels
- Many sellers not offering price reductions
- Listings are selling nearly a month faster than last year
- Manhattan prices and new inventory continue to climb, while rents break records
- Brooklyn sales and rental price increases break records
- Queens sales prices down, but rents up sharply
Sales inventory up, but still below last year’s levels
After three months of declining sales inventories, StreetEasy data shows an increase in homes available for sale in January and February. 16,622 homes were for sale in New York City in February, 549 more than in January. Despite this, inventory is still 12.2% lower than last February, so there is still room for inventory to fully recover.
In my observation, many sellers are preparing for the spring and early summer sales, as this is the season with the best weather and the most beautiful streetscapes. The tree-lined streets and the start of the peak season begin around April each year. This is also reflected in the steady rise in inventory.
Many sellers do not offer price reductions
Personally, I think this is a temporary phenomenon, perhaps due to rising interest rates, as the number of loan applications did drop in February-March, or perhaps due to an upward trend in listings. It is also possible that there is an upward trend in listings. Also, recent listings are starting at significantly higher prices, leading to a divergence in price estimates between sellers and buyers.
The number of homes offered at reduced prices is a good indicator of how strong buyer demand is, and in February, 8.1% of New York City listings for sale were advertised at reduced prices. This is the same as last February, but down from 10.2% prior to the February 2020 pandemic. As of February, the median asking price of homes in New York City was $950,000 – stable compared to the previous year.
However, more price reductions are likely to come. In New York City, the price-to-list ratio is declining, meaning sellers are cutting back between the initial list price and the closing price. in January, the median sales-to-list price ratio for Manhattan homes was 98.7%, meaning sellers in the area were very close to getting their original list price. In February, that number dropped to 90.9 percent. This means that a home originally asking $1 million sold for $999,000. While fewer sellers are advertising price reductions, this data shows that buyers are still negotiating and getting lower prices before closing.
Homes are selling nearly a month faster than last year
The speed of sales is a very important indicator of how willing buyers are and how hot the market is, and this speed of sales can cause home prices to rise.
In February, the median time to market in New York City was 88 days, 28 days faster than last year. Of the districts analyzed in this report, Brooklyn had the fastest time to exit the market at 79 days. Homebuyers may notice that homes will move more quickly as we enter the shopping season.
“The New York City market has been unpredictable for two years, but this data shows that the seasonality of the sales market is back,” said Casey Roberts, StreetEasy Housing Trends Specialist.
“This spring will be competitive for homebuyers, but the increase in new inventory we’re seeing is promising. The recent rise in home prices should prompt more sellers to list their homes for sale, making it easier and more likely for buyers to find and win a home they like.”
Here is more information about the sales and rental markets in Manhattan, Brooklyn and Queens.
Manhattan Home Prices and New Home Inventory Keep Climbing, While Rents Break Records
In Manhattan, 1,926 homes came on the market in February. This is 25.6% more than the previous year, which is good news for Manhattan buyers. Across Manhattan, there were 8,099 homes for sale in February, down 17.5% from last year.
The median asking price in Manhattan was $1.47 million in February, 8.9% higher than last year, but down $25,000 from $1.495 million in January.
The median asking rent in Manhattan reached a new high of $3,800. This is 36% higher than last year. 10,327 rental units were available in Manhattan in February, a 66% decrease from last year. This year-over-year decline is the smallest since September 2021, suggesting that the sharp decline in rental inventory may soon cool.
Brooklyn Sales and Rental Price Growth Breaks Records
In Brooklyn, 1,180 homes entered the sales market in February. This is 23.6% more than the previous year. Across the borough, there were 4,423 homes for sale in February, down 12.1% from last year.
The median asking price in Brooklyn was $928,000 – up 3.2 percent from last year and the largest annual increase since May 2018.
In the Brooklyn rental market, the median asking rent reached a record $2,800. This is 16.7% higher than last February. The rental inventory is down 53.3% from last year, with 8,563 rentals throughout the borough. This is only 5% lower than the inventory in February 2020 (before the pandemic hit New York City), so while inventory is tight, it is not too different from the pre-pandemic situation.
Queens sales prices down, but rents up sharply
Queens was the only borough analyzed in this report to experience an annual decline in median asking prices. The median asking price in Queens was $588,000 in February, a 3.6% decline compared to last year.
Queens added 755 new homes to the market in February, 15% more than last year. Total sales inventory was stagnant compared to last year, with 3,072 available homes on the market.
The median rent in Queens was $2,300 in February, up 15 percent from last year. Median rents have remained unchanged for three consecutive months. The rental inventory is down 42.8% year-over-year, with 4,057 available rentals throughout the borough. Compared to Brooklyn and Manhattan, Queens’ rental inventory has remained relatively stable throughout the pandemic.
From my point of view, the trend in Queens is still bullish, it is just that housing prices have been relatively stable over the past 2 years so this quarter’s numbers are not impressive, but it is a testament to the resilience of Queens housing prices and the strong demand for housing.