Predictions For 2022 Sales Market

David Goldsmith

All Powerful Moderator
Staff member

NYC home sales slowdown coming in 2022, Brown Harris Stevens CEO says​

Bess Freedman cited higher interest rates, diminishing supply​

After 2021 marked a banner year for housing markets inManhattan and Brooklyn, New York City home sales could slow in 2022, BHS CEO Bess Freedman said.
Freedman told Bloomberg TV’s Surveillance that higher interest rates and housing supply woes could spur the change of pace among the city’s sales.

“The Fed announced that rates will go up maybe two to three times next year, so we may see a little bit of a slowdown,” Freedman said to Bloomberg. “Also, supply has diminished because demand is so heightened.”

The brokerage leader’s prediction mirrors similar projections from Jonathan Miller, who compiled a November market report for Miller Samuel on behalf of Douglas Elliman.
“Inventory is continuing to collapse, and that’s why we anticipate continued price growth into the new year,” Miller told The Real Deal.
Real estate data from UrbanDigs published earlier this month said that through Dec. 5, listings in Manhattan exceeded the 2008-2018 average by 18 percent. But buyers exhausted supply at an even faster rate, putting net new inventory below zero for nine of 11 months this year. Net new inventory in November was negative 861 units.

Meanwhile, UrbanDigs noted that listing discounts fell consistently throughout the year for the first time since mid-2015. Prices rose in tandem, helping lead to a banner year for the Manhattan’s luxury market.
Supply and demand issues across the country have spurred the housing market along. A report from Redfin showed the number of homes on the United States market hit a historic low during the week ending Nov. 28. There were fewer than 539,000 active listings that week, a 26 percent decline year-over-year.

Strong demand and weak supply resulted in a median sale price of $360,375 across the U.S. for the first four weeks of November, surpassing a record dating back to July 25.
 

David Goldsmith

All Powerful Moderator
Staff member


The Brooklyn apartment market was red hot in 2021. “It reached new records for both sales and prices,” said Gregory Heym, Brown Harris Steven’s chief economist. “And demand for townhouses was also very strong, as those prices also hit a new high.”
For 2022, while competition for neighborhoods throughout Brooklyn expects to reach record highs, some factors remain unpredictable.
Here is an overview of the market’s outlook for 2022, with insights from top Brown Harris Stevens agents and brokers specializing in Brooklyn real estate.
Ban Leow, BHS real estate agent:
Current market forecast, simply put, is unpredictable, and also very segmented in different neighborhoods. While Park Slope, Downtown Brooklyn, Cobble Hill and Carroll Gardens are experiencing a robust buying spree, other neighborhoods are experiencing stagnant inventories with tons of window shoppers. We’ve been on a Covid-19 pricing roller coaster since 2020, and with a new variant detected, the “yo-yo” pricing goes into effect. Sellers demand high listing prices and the buyers are still in the “pandemic” low-ball mode. I believe the market will gain strength again in mid-2022 if the Omicron variant is somewhat contained.
Steven Segretta, BHS real estate agent:
I see active buying interest across all sectors of the Brooklyn market driven by first-time homebuyers and those migrating into Brooklyn from other areas. Given the strength of the market last year and the acceleration this year, I expect demand to outpace supply in 2022 with continued upward pressure on prices. Macro factors like the economy, inflation, rates and the pandemic may obviously change the dynamic, but without dramatic shocks to the system, I think we see continued momentum in the Brooklyn real estate market.
Joanna Mayfield Marks, BHS real estate agent:
Rates are supposed to hold into July, loan limits on one- to three-family homes were just increased nationwide and Brooklyn is cool. I believe, because of these factors, the first half of the year is going to zoom! Borrowing power is up. Buyers have flocked to Brooklyn for the “cool” cachet for over a decade, and some who left for a season have returned. Now living happy and well is paramount and Brooklyn offers it all: Light, air, parks, culture, art, cuisine. We are the youngest, most highly educated, diverse borough — according to Mayor Eric Adams.
Bill Sheppard, BHS real estate agent:
As we continue to live with Covid concerns, buyers still need to get on with their lives. I expect 2022 will be a very competitive year for Brooklyn buyers, especially for townhouses, as outdoor space and square footage continue to be a priority.
Dena Driver, BHS real estate agent:
I believe the fourth quarter reports will only further confirm the strong return of New York City real estate. Luxury real estate signed contracts tripled in 2021 compared to 2020, which was a weak year, but I expect when the fourth quarter figures come out, they will be vastly up even when compared to 2019.
Brooklyn has had a stronger market overall when compared to Manhattan through the pandemic; people are still moving to Brooklyn for the lifestyle and access to waterfronts and green spaces. The economic figures, expected bonuses and jobs growth all remain high.
Peter Grazioli, BHS real estate agent:
I think we will see continued strong demand, especially in the townhouse market, and some pricing stability as we saw starting in the last half of 2021. The smaller studio and one-bedroom units will continue to be slow going.
 

David Goldsmith

All Powerful Moderator
Staff member

2022 NYC real estate forecast: Buyers look over their shoulders, sellers wait for prices to rise, renters catch a break



New York City’s real estate market boomeranged in the second half of 2021: Renters and buyers returned to the city and snapped up apartments. Thanks to that burst of demand, Covid discounts and concessions nearly evaporated as owners and sellers gained the upper hand. Now that Omicron infections are skyrocketing, it feels like New Yorkers are collectively holding their breath—waiting to see if we are in for another bad stretch.
Omicron is a major question mark, but there are some indications of what 2022 will bring: There will be less competition for rentals since the stampede of returning New Yorkers is largely over, although you can expect rents to continue to rise. And for tenants battered by job loss and unable to pay rent, there may be more federal funds and legislative protections.
On the sales side, buyers can expect to have more apartments to choose from as the market reverts to typical spring and fall selling seasons. They will feel pressured to lock in a deal before mortgage rates inch up and prices ascend past pre-pandemic 2019 levels. Sellers can anticipate the return of international buyers as long as international flights remain possible—and travelers here feel safe.
Our 2022 forecast is designed so you can skip ahead to the section most relevant to you via the links below. However, because each segment of the NYC real estate market is interconnected, we recommend reading through the entire piece when you have the time.
Whether you plan on buying, selling, or renting a new place, here’s what you need to know in order to achieve your real estate goals this year.

What to expect if you’re a renter​

If you’re going to be hunting for a rental in 2022, you may be feeling discouraged. It’s tough to find a place to rent these days and the deals that landlords were offering during the height of the pandemic are practically gone. Manhattan rental inventory plunged as a result of intense leasing activity in the fall, with the median net effective rent surging a whopping 23 percent in November. The Brooklyn and Queens rental markets also saw increases in rents and similar frenzied leasing.
But you may be able to catch a break in the coming months. The turbo-charged rental market is slowing down after a year and beginning to approach more seasonal levels, says Jonathan Miller, president and CEO of appraisal firm Miller Samuel. That may be because NYC has already regained three-quarters of its population that left during the lockdown, setting the stage for a further slowing of demand for rentals this winter.
“We had eight to nine months of pent-up demand crammed into 90 days, giving the impression the rental market is a lot hotter than it actually is,” says Adam Frisch, senior managing director of leasing at Lee & Associates, a management company representing small building owners in Manhattan.
This winter will feel very different from the fall, he predicts.
You can expect to see an “unprecedented amount of vacant apartments” available this winter, Frisch says. Units that normally would have rented in the late summer to early fall in 2020 sat on the market until the winter to early spring of 2021 because landlords took a while to drop the rents to below market rate.
“Landlords are now sending out renewal notices with increases at pre-Covid rates,” Frisch says. “A lot of renters can’t afford those apartments, and most will leave,” he says.
That could mean more availability and better deals in prime Manhattan and Brooklyn neighborhoods—if you don’t mind checking out apartments when it is bitterly cold.
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Rents predicted to rise in 2022​

Now more than ever, the high and low ends of the rental market are behaving like they are in two different cities: Rents are increasing at a faster rate for doorman buildings (a proxy for the high end) compared to non-doorman rental buildings. Most expect this pattern to continue—driven by the need for larger apartments (read: more expensive) to accommodate New Yorkers who are working from home and generally spending more time in their apartments as the pandemic rages on.

“The high-end rental market is incredibly strong. We are seeing bidding wars and swift lease signings on nearly every listing, even apartments asking over $40,000 a month,” says Kirsten Jordan, a broker at Douglas Elliman. These trends will continue in 2022, she predicts.
The numbers tell the story even better. According to the Elliman Report, in November, the median rent for Manhattan doorman buildings was $4,200, a 20 percent increase over the $3,500 median rent seen in November 2020. The median rent for non-doorman Manhattan buildings in November was $2,650, an increase of 6 percent from November 2020.
While rents are on the rise, they still have not surpassed pre-pandemic levels two years ago—case in point the median rent for a non-doorman building in November 2019 was $3,000.
In anticipation of rising rents, more renters are choosing to lock in better deals with longer leases, a pattern Miller is seeing across the city—and something to consider if you’re weighing a new lease.
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Bidding wars for rentals may come back this summer​


One of the stranger hallmarks of the NYC real estate market during the pandemic has been the trend of bidding wars for rental apartments, which happened in the summer and early fall of 2021 in many NYC neighborhoods. The rental market seemed a lot like the sales market as a result of a spike in demand from renters flooding back to the city in anticipation of office reopenings and the start of the school year.
One Park Slope renter who was asked to submit her best and final offer told Brick: “I felt like I was buying.” Nicole Beauchamp, an agent at Engel & Völkers, said trying to get into a Midtown West showing for a hot apartment was like “trying to get into a club.” There were about 15 people waiting to see the place.
Will there be bidding wars for rentals again in 2022? If offices put off fully reopening until late spring or even summer, when Covid cases plummet with warm weather—there could be a repeat of last year’s rush back to the city, one major property manager predicts.
Robert Morgenstern, principal of Canvas Property Group, a property management company that owns 2,000 NYC apartments, says last year’s market was unique, but “this summer could be equally intense.”
He predicts offices will “continue to reopen after what we can only hope is a temporary spike of Covid.” That will draw renters back, but he says they’ll be hampered by a lack of apartments. Morgenstern blames the shortage of rentals to a lack of tax incentives for developers and changes to the rent laws that discourage landlords from deregulating apartments.
“We have seen the most demand for apartments in primarily residential areas where the retail and restaurant scenes are booming,” Morgenstern says. “We saw the market explode in direct correlation to the nightlife scene.” Neighborhoods like the East Village, Lower East Side and Williamsburg were “all thriving, while the type of building and amenity offerings seemed less relevant,” he says.

Financially struggling renters could get more aid​

If you are behind on your rent, you may be eligible for rental assistance through the Emergency Rental Assistance Program (“ERAP”) or other related programs. The fund has been rapidly depleted, but New York could get a lifeline from a plan to reallocate funds from states where they haven’t been maxed out.
When you have an open application for ERAP or related assistance, you are entitled to an automatic stay of any eviction proceeding for nonpayment of rent. Meanwhile housing court continues to move very slowly—as a result of a pandemic backlog.
Some good news for market-rate tenants is the possible passage of the good cause eviction law. This would extend the protections given to rent-stabilized tenants to those in market-rate apartments, allowing all tenants automatic renewals unless the landlord has good cause to evict. Previous versions of this bill have also capped rent increases at renewal time.

What to expect if you’re a buyer​

Throughout 2021, the number of Manhattan and Brooklyn co-ops, condos, and townhouses for sale didn’t keep up with demand. As a result, bidding wars heated up, the Covid discount shrank, and prices increased.
But New York City still has some runway to go before approaching the inventory drought that has gripped suburbs for virtually the entire pandemic.
According to the Elliman Report for the Manhattan sales market in the third quarter, there were 7,694 available listings in Manhattan, about 17 percent more than the 10-year average for the third quarter. The months of supply, or how long it would take to sell all inventory, was 5.1 months–quite a bit less than the eye-popping 20.3 months in the third quarter of 2020.
“At the current rate of demand, Manhattan likely won’t experience the same extreme level of inventory shortages [as the suburbs] for another year,” Miller says.
Still, that may not be comforting to buyers who have been unable to land a deal.
“So far in December we've seen more units signed into contract than have been listed for sale, so buyers are out in force while sellers are slowing down,” says John Walkup, co-founder of real-estate analytics firm UrbanDigs.
A bright spot for buyers is a normalizing pattern of spring and fall selling seasons. Walkup is among those who say that seasonality has “generally returned to the market.”
“I anticipate the next wave of listings will begin in February, which is the usual pattern,” Walkup says.
However, with new records being shattered for Omicron infections in New York by the day, making timeline predictions is fraught. Sellers could take a page out of 2020’s playbook and hold off on listing their apartments until the surge of infections passes.
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More New Yorkers will have access to lower-cost mortgages​

In 2022, more NYC buyers will get something they have not had before: Cheaper conforming loans from Fannie Mae and Freddie Mac that will boost their buying power.
The new, conforming loan limit for mortgages that can be acquired in high-cost areas like New York City is $970,800, an increase from $822,375. It will likely be a boon to buyers who couldn’t meet jumbo loan requirements such as having six months of mortgage payments in your bank account, versus the typical two months' worth for a conforming loan, explains Brittney Baldwin, vice president and loan officer at National Cooperative Bank (a Brick Underground sponsor).
Some strings are attached though. In response to the condo tower collapse in Surfside, Florida, Fannie Mae is changing lending guidelines to prevent buyers nationwide from purchasing in co-op and condo buildings without sufficient reserve funds to pay for structural repairs or use an assessment to pay for repairs involving structural integrity (until the repair is completed).
Effective January 1st, loans for condo or co-op units in buildings with significant underfunded reserves or unsafe conditions will not be “eligible for purchase”—meaning Fannie Mae will not buy these loans back from lenders—which will likely prompt lenders to tighten their standards to match. There’s also a new reserve fund requirement: Buildings will have to keep 10 percent of their operating budget in their reserve fund, a departure from past practices that allowed buildings to offer up a reserve study instead.
These stricter standards may result in an “uproar” from buyers not getting access to financing—and stepped up maintenance and common charges in buildings that need to shore up their reserve funds in order to come into compliance, says Orest Tomaselli, president of project review at CondoTek, which provides data on condos for lenders.

Mortgage rates set to climb in 2022​

Real estate sales have been juiced by mortgage rates hovering near historic lows for an extended period, a result of the Federal Reserve buying mortgage-backed securities to support the economy. But the Fed plans to taper off those purchases to curb rising inflation—and mortgage rates are expected to rise.
New economic projections indicate the Fed may raise interest rates three times in 2022. Omicron is still a wild card, however. If the impact of the new variant is severe it could keep the Fed from executing its tapering plan, says Melissa Cohn, regional vice president and executive mortgage banker at William Raveis Mortgage.
Cohn says that the Fed’s revised policy won’t hurt buyers looking to purchase a home within the next few months, but you might want to act soon.
Mortgage rates should remain around 3 percent through the early part of 2022, Cohn says.
She expects to see a .25 percent to a 0.5 percent increase in mortgage rates over the next couple of months, with a limited impact on real estate: “The real estate market was doing well when rates were at 3.625 percent, and will do so again,” she says.
Pro Tip:
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What’s the likelihood of raising the SALT cap?​

Changes to the State and Local Tax cap could keep more money in owners’ bank accounts—that’s if Washington approves.
The Biden administration’s Build Back Better bill calls for raising the SALT cap from $10,000 to $80,000 through 2030. After that it would be reduced to $10,000 and then expire completely.
However, repealing or raising the cap is probably a low priority in the ongoing negotiations to get the bill through the Senate. Some see it as a perk for wealthier coastal Americans in high tax states like New York. If there is no change at all, the current $10,000 SALT cap will expire after 2025.
Buyers want to see legislative action because more money in their bank accounts boosts their spending power—leaving more money to spend on a mortgage, for example. And sellers would appreciate this because it means buyers are more likely to make a move—and can trade up a larger place.

What to expect if you're a seller​

If you’re planning to sell this year, expect to encounter a brisk market, but one in which prices have not yet fully rebounded to their pre-Covid 2019 highs.
Prices won’t fully recover until 2023 or 2024, predicted UrbanDigs CEO Noah Rosenblatt and COO John Walkup on a recent panel discussion since international and investment buyers have been sitting out the market. Walkup notes that when businesses fully reopen and NYC’s ground-floor stores come back to life—these types of buyers will return and drive prices higher—but it will take time for this to happen.
Sellers can expect pandemic price cuts to not cut as deep in 2022.
Miller has been tracking what he calls the “Covid discount,” an estimation of how much Covid brought prices down below what was expected—if there had not been a pandemic. In 2021, that discount was about 5 to 7 percent.
“Entering the new year, the aggregate Covid discount is less than 5 percent in a highly polarized market, but it looks like it will be largely eliminated by the summer if current trends hold. The assumptions include the Omicron variant peaking in January as expected and mortgage rates continuing to remain where they have been over the past few months,” he says.

Renovated apartments give sellers an edge​

If you’re selling a renovated apartment or brownstone, you will continue to have an edge this year because of supply chain issues. Many buyers will shrink away from renovations due to major backlogs and shortages for appliances, parts and materials that are driving up costs and causing delays (or requiring renovators to come up with alternate plans.)
“Unrenovated units are not enjoying the recovery as much as renovated,” Rosenblatt notes, describing them as “flatlining” as a result. The supply chain “is all broken down,” he says.
Apartments with private outdoor space will also maintain their advantage. Pandemic-era buyers are willing to pay an even bigger premium for this amenity.
Garrett Derderian, director of market intelligence for SERHANT, recently figured out just how much more. In a recent report, he looked at sales of Manhattan and Brooklyn condos and co-ops before and found that after the lockdown, Manhattan apartments with outdoor space sold for an average price per square foot of $1,625, compared to $1,345 for apartments without outdoor space. That represents a premium of 21 percent, and an increase of 3 percent over pre-lockdown pricing.
Derderian predicts outdoor space will continue to be worth more going forward, even as apartments without outdoor space start to recover with the return of international buyers to the NYC market.

Will international buyers return in force?​

In early November, when the U.S. reopened to vaccinated international travelers and before anyone had even heard of Omicron, there was the expectation that like some well-heeled cavalry, foreign buyers would be returning to snap up the luxury units that had been lingering on the market.
The coming influx spurred some local buyers to get off the fence, says Michael J. Franco, a broker for Compass.
It made “domestic buyers move more quickly and make offers more quickly, thinking that they’ll have a limited amount of time to get a certain deal on a property, and they think that prices are going to go up,” he says. “I recently sold an apartment at The Plaza, and both of the buyers who were pursuing it were conscious of foreign buyers coming back and wanted to make a deal happen quickly.”
Now that the Omicron variant is surging, the future is more uncertain.
“There may be a return of international buyers, but it won’t be a huge influx in 2022, particularly because some European countries are shutting down again,” predicts Ellen Sykes, a broker for Warburg Realty.
Still, another broker says NYC can count on a wave of buyers from China. Mark Chin, a broker at Keller Williams New York City, says the defaults of large Chinese real estate developers is almost certain to send over buyers who want to park their funds in the safe haven of NYC real estate.
“For a while the Chinese buyer evaporated because they were making so much money at home,” Chin says. “That ship has sailed.” In 2022, we “will start to see Chinese money here,” he says, estimating that eventually “billions are going to be invested in residential real estate.”
And it doesn’t matter if borders are closed or not. As Chin points out, “Chinese buy off-plan all the time” meaning they frequently buy condos that are under construction. And they are equally at ease buying something sight-unseen. “They’re comfortable buying over Zoom,” he adds.
However, John Walkup of UrbanDigs has a different take on foreign buyers: “I think the era of wealthy foreign buyers spending lavishly on rarely used Billionaire's Row condos has likely seen its peak.”
He says that even though NYC real estate has proven to be an attractive place for foreign investors to park their wealth, buying here “comes with perpetual carrying costs like taxes and maintenance or common charges, not to mention a higher level of transparency.”
Blockchain-based crypto-currencies may present a competing way to preserve capital, if you can stomach the volatility.
“While it may not represent a significant, head-to-head competitor to NYC real estate, it is one of the growing numbers of options that come with less friction than a condo purchase,” Walkup says.

 

David Goldsmith

All Powerful Moderator
Staff member

Hybrid work, crypto and inflation poised to stoke 2022 luxury market​

Another strong year ahead for the sector: Sotheby’s​


Trends that have taken hold during the pandemic are poised to fuel another banner year for the global luxury housing market in 2022, according to a report from Sotheby’s International Realty.
The report is predicting a strong year for the sector. Bloomberg noted key factors behind the forecasted boom include still-low interest rates, inflation and hybrid working options available to many employees looking to grab more land.

“The real estate market is now being driven by hybrid work vs. remote work,” said Sotheby’s International Realty chief marketing officer Bradley Nelson.

The ability to work remotely could be advantageous to some in the luxury market who want to take advantage of markets without state income taxes, such as Florida and Texas. Conversely, international markets imposing increased taxes on luxury deals such as Ireland and Canada could suffer.
“You’re going to see the greatest investments continue to be in tax havens,” Nelson said to Bloomberg.

Another trend Sotheby’s is looking out for is increased transactions in cryptocurrency.
“If wealth creation drives a market, and crypto is driving wealth creation, then I think there’s going to be an increased demand for that kind of payment, as opposed to cash,” Nelson said, looking ahead to the next five years.

The report predicts other trends to continue into 2022 in the luxury space will include fading demand in the suburbs and higher prices in the exurbs, as well as a rebound in urban centers. Nelson said it was virtually impossible to underprice a home as demand and low supply would pull up competition, but the same isn’t necessarily true for overpricing a home.

“It’s certainly possible to overprice a property,” Nelson said. “But ultimately, with some of these ambitious asking prices, I think it’s a strategy of price discovery.”
In Manhattan, the luxury market kicked off 2022 with a strong start. The market saw 22 luxury contracts signed between Dec. 27 and Jan. 2, the highest volume to start the year since Olshan Realty’s luxury market report began in 2006.
 

David Goldsmith

All Powerful Moderator
Staff member
Who predicted this? We know how the prediction in the previous post about luxury sales booming further is currently going.

“A housing recession”: Home sales fall for six straight months​

Median sales price fell by $10K in July: NAR​

Government officials have been loath to declare the country in a recession. In the housing market, however, some economists believe existing home sales are already there.
Existing home sales dropped for the sixth consecutive month in July, according to a report from the National Association of Realtors. The half-year streak marks the longest period of consecutive drops in eight years.

Home sales fell 5.9 percent from June to July, clocking in last month at a seasonally adjusted rate of 4.81 million. Year over year, sales declined 20.2 percent.
The drop in sales is being attributed in part to mortgage rates, which have been on the rise since the Federal Reserve first hiked interest rates earlier in the year. NAR’s chief economist Lawrence Yun said sales may stabilize as mortgage rates flatten below June’s 6 percent peak.

“We’re witnessing a housing recession in terms of declining home sales and home building,” Yun said in a release. “However, it’s not a recession in home prices.”

The median existing home price also dropped from the previous month, although it is up significantly from last year. The median price was $403,800 in July, down exactly $10,000 from June. It’s up 10.8 percent from last year, the 125th straight month of year-over-year gains.

While existing sales across all four regions dropped in July, median home prices jumped across the board. Miami recorded the highest year-over-year median list price growth, up 36.2 percent year-over-year.

In addition to mortgage rates, lack of inventory is also driving sales down. At the end of July, there were 1.3 million housing units available, a 4.8 percent gain from June. But that’s still a relatively low 3.3-month supply of unsold inventory at the current sales pace, which is accelerating; properties were on the market for an average of 14 days last month, matching the lowest mark since NAR started keeping track in May 2011.
It’s not clear how homebuilders will to close the gap between supply and demand and prop up inventory, but they aren’t feeling good about the market. The National Association of Home Builders/Wells Fargo Housing Market Index dropped for the eighth straight month in August, falling below the breakeven mark for the first time in 27 months.

Housing starts dropped nearly 10 percent from June to July, according to the Commerce Department.
 

David Goldsmith

All Powerful Moderator
Staff member
Home sales fell for the ninth straight month in October, as higher mortgage rates scared off potential buyers

Home sales declined for the ninth straight month in October.
Sales of previously owned homes dropped 5.9% from September to October, according to the National Association of Realtors.
That is the slowest pace since December 2011, with the exception of a very brief drop at the beginning of the Covid-19 pandemic.

Home sales declined for the ninth straight month in October, as higher interest rates and surging inflation kept buyers on the sidelines.

Sales of previously owned homes dropped 5.9% from September to October, according to the National Association of Realtors. That is the slowest pace since December 2011, with the exception of a very brief drop at the beginning of the Covid-19 pandemic.

The October reading put sales at a seasonally adjusted, annualized pace of 4.43 million units. Sales were 28.4% lower year over year.

Even as sales slow, supply is still stubbornly low. There were 1.22 million homes for sale at the end of October, an decrease of just under 1% both month to month and year over year. That's a 3.3-month supply at the current sales pace. Historically, a balanced market is considered to be a six-month supply.

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The median price of an existing home sold in October was $379,100, an increase of 6.6% from the year before. The price gains, however, are shrinking, as the seasonal drop in home prices this time of year appears to be much deeper than usual.

"Inventory levels are still tight, which is why some homes for sale are still receiving multiple offers," said Lawrence Yun, chief economist for the NAR. "In October, 24% of homes received over the asking price. Conversely, homes sitting on the market for more than 120 days saw prices reduced by an average of 15.8%."

Overall, homes went under contract in 21 days in October, up from 19 days in September and 18 days in October 2021. More than half, 64%, of homes sold in October 2022 were on the market for less than a month, suggesting that there is still strong demand if the home is priced right.

While sales are dropping now across all price points, they are weakening most in the $100,000 to $250,000 range and in the $1 million plus range. On the lower end, that is likely due to the severe shortage of available homes in that price range. Big losses in the stock market, as well as inflation and global economic uncertainty, may be weighing on high-end buyers.

First-time buyers, who are likely most sensitive to the increase in mortgage rates, made up just 28% of sales, down from 29% the year before. This cohort usually makes up 40% of home purchases. Investors or second-home buyers pulled back, buying just 16% of the homes sold in October compared with 17% in October 2021.

Mortgage rates are now more than double the record lows seen just at the start of this year. But recent volatility in rates is also wreaking havoc on potential buyers. Rates shot up in June, settled back in July and August, and continued even higher in September and October. Then they dropped back again pretty sharply last week.

"For many, the week-to-week volatility in mortgage rates alone, which in 2022 has been three times what was typical, may be a good reason to wait," said Danielle Hale, chief economist with Realtor.com. "With week-to-week changes in mortgage rates causing $100+ swings in monthly housing costs for a median-priced home, it's tough to know how to set and stick to a budget."
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
2023 predictions? Ill throw some out there for fun

- Bear rally starts 2023 off, but doesnt last long
- Manhattan sees relief period in both sales and rentals during this time
- As we get closer to Q2-Q3, I wonder if markets expecting rate cuts (they do now) in 2H of next year dont actually get them. Rates stay higher, longer. As a result, we have a second wave down to ultimate lows. Manhattan and natl housing react accordingly to any risk off sentiment period in markets.
- 2H 2023, I think we see the lows of this cycle in equities and housing and we may even end the year with a light bounce
- Fed Terminal rate ends up around 5%-5.25%, and likely to stay there for longer to contain sticky inflation
- Secular buying opportunities in corporate bonds, equities, housing
- 2024,2025,2026 reflationary years as first wave of inflation dissipates and markets ultimately react to stimulatory monetary policy as the fed ultimately cant steer a soft landing in 2023
 

David Goldsmith

All Powerful Moderator
Staff member
Lenders should start getting their short sale programs off the ground now before they really need them. Back in the early 1990s I worked with Citibank on their somewhat underground program for NYC Coops (NB this was way before "everyone" became aware of what short sales were post-GFC) and when they could bring themselves to execute it worked out extremely well for them.
 
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