Will NYC Real Estate Prices Drop in 2023?
2022 has been a mercurial year for NYC Real Estate. We started the year strong with pent-up demand from 2021, rolling into 2022. But the sharp jump in mortgage rates, volatile stock market, and talks of a recession and inflation shifted market dynamics.
But as we wrap up the year with our last newsletter of 2022, here are our predictions for the NYC real market in 2023.
1. NYC home prices will fall, but don't expect a collapse
So far, we have yet to experience significant price declines-a 7.5% drop since last quarter. Homeowners that could share the most significant losses are those that bought in the past 2-3 years. But most people stay in their homes for 7-14 years, so these price declines impact a small fraction of sellers.
All in all, the Fed will likely keep interest rates elevated through much of next year to combat inflation. Currently, the 30-year mortgage rates hover around 6%, and despite the alarmist headlines, 6% is right in line with the 51-year average (since 1971). Mortgage rates are the highest they've been since 2009, but if you're in the market, don't let that dissuade you from buying in 2023. Date the rate; don't marry it.
2. Not-so-typical Buyers Market
While we've officially entered a buyer's market, inventory remains just above 7,000 listings, a 17% drop since last year. Limited inventory, caused by higher mortgage rates and price drops, will likely continue as we head into Quarter 1 of 2023. Despite lower inventory levels, there's still quite a bit of opportunity for buyers and sellers looking to upgrade as the market continues correcting itself. Especially in the somewhat forgotten segments of the market, like co-ops and properties needing renovation.
3. A Recession does not equal a Housing Crash
Should there be a recession in 2023, it will be nothing like the housing crash of 2008. Unlike 2007-10, this market is not grossly overbuilt, the banks have not acted recklessly, and we've not seen significant price declines.
In fact, in the face of an impending recession, it is better to be in real estate than in stocks. Over the long term, real estate remains the most stable investment, a hedge against inflation and most economic downturns.
It's been quite a busy year for all of us, and we look forward to 2023. We are so grateful for your trust and business—happy holidays to you and yours.
See you next year!
