NYC sales market slows down, but prices remain high

One of the most expensive and competitive real estate markets in the world is cooling off. Homebuyers in New York City might finally get a break from the aggressive price increases and bidding wars. The number of homes that went into contact and the asking prices went down in July, according to the market report from StreetEasy. 

The slowdown in the housing market comes from rising mortgage rates and a steep increase in home prices. In May, the median asking price for available NYC homes climbed to $1 million, a new all-time high. Later, in July, the asking price fell slightly to $990,000. High home prices combined with expensive borrowing costs caused a shift in buyers' demand. Some people decided to exit the market, and some began to look into more affordable options. 

The demand for homes that cost less than $500,000 skyrocketed in July, while listings with the asking price of $1.5 million or more saw less interest from potential buyers, and fewer contracts were signed. According to StreetEasy, buyers’ interest in homes priced below $500,000 is likely tied to the sharp increase in mortgage rates which has slashed potential buyers’ budgets. 

Although the NYC real estate market is no longer as competitive as it was at the beginning of the year, the demand for homes asking between $800,000 and $1.5 million remains strong. This price segment is mostly searched by repeat buyers and those who look for a new home after successfully selling their previous one. Listings that ask $5 million or more also saw consistent interest from home shoppers. StreetEasy expert and an agent with Douglas Elliman, Ryan Kaplan, suggests that bidding wars still remain present in the market.

“The mad rush of New Yorkers returning after quarantine has largely been reabsorbed, and the frenzied markets of the first half of this year have tempered. Even so, I’m still seeing well-priced, well-located homes being fought over,” Kaplan told StreetEasy. 

“I expect we’ll continue to see action, especially from buyers who still possess the liquidity and means to purchase in the luxury market, and those seeking refuge from the competitive rentals market that may be after more affordable homes.”

Resources:

“The NYC Sales Market Shifts from a Boil to a Simmer,” by Kenny Lee (StreetEasy, 2022)

“NYC Real Estate Market Begins to Cool, But Rents Remain High,” by Chris Mench (thrillist, 2022)

“Opinion: The housing market is slowing down, but homes aren't getting cheaper anytime soon,” by Orphe Divounguy (CNN, 2022)