Summer 2022 Market Update

We, at the LevinKong Team, hope that you are safe, well, and enjoying your summer thus far. While summer is typically a slower season for NYC real estate, it certainly didn’t feel that way last year. Limited inventory across the market, low interest rates, and frenzied buyers (who lost out on properties all spring) nullified that typical slowdown. This year, we are again feeling the lazy days of summer as the sales pace has slowed to its normal crawl.

Sales activity in the city is down more than 25% from this time last year. We’ve also seen a significant increase in price reductions across all price and market segments. While this feels like a big deal when we look at year-over-year and month-over-month numbers, it is actually in-line with our normal summer pace (historically speaking). Specifically, we are currently right in the 2007 to 2019 seasonal transaction volume range.

July’s closed numbers, on a price-per-square-foot basis, were flat from this time last year, in both our Brooklyn and Manhattan markets (actually up 2.7% in Manhattan). Due to the lag between contract signing and closings here in the city, we won’t see the impact of lower prices for another couple of months. When we do, we anticipate that they will be modest, particularly so in Brooklyn. It appears we are returning to a normal real estate market, and for many that is a welcome development.

Sellers certainly need to adjust their expectations and not look at recent transaction prices for guidance. Rather, they should price against their competition in the current market, or they could be in for a frustrating ride. Buyers are still out there and the market really hasn’t lost very much value. Trades can still be very rewarding; this will be especially true for those making lateral or upward trades in the market.

Our rental market continues to be a juggernaut without an end in sight. Average rent in Manhattan crossed the $5,000 per month threshold for the first time, and record-breaking average Brooklyn rents are fast approaching $4,000. Our investor clients are honing in and taking advantage of an incredible opportunity. We are also starting to see renters, nearing the ends of their leases, pivoting to purchases. Elevated interest rates are no match for Hunger Games-style competition in the rental market.

With proper guidance, there are many ways to take advantage of this dynamic and intricate market. More than ever, a data-driven, research-based approach rooted in decades of experience, will equip our clients to thrive in this environment. Enjoy the rest of your summer and please let us know if we can answer any questions you may have about the market, or how best to navigate complicated decisions.