Gregory Heym is Chief Economist at Brown Harris Stevens. His weekly series, The Line, covers new developments to the economy, including trends and forecasts. Read on for the latest report and subscribe here to receive The Line in your inbox.
A lot has been written recently about the dramatic slowdown in Manhattan apartment deals since April. It certainly makes sense that 2022 hasn’t repeated the record-setting performance of 2021, as we all knew that there was no way a market could stay that hot forever. But, that doesn't mean that deals aren’t happening.
No big surprise that since late April, signed contracts are down an average of 26% on a year-over-year basis.
The question that doesn’t get asked enough however, is, "How does today’s market compare to more ‘normal’ times?"
Here is a comparison of 2022 to the average number of signed contracts from 2010-2019.
You’ll see that compared to the 10 years before the pandemic, today’s market looks pretty good. In fact, since late April, today’s market has been 8% more active than the 2010-2019 average.
Two weeks ago, I wrote about how the national housing data was painting a bleak picture of the market. Why is Manhattan outperforming the rest of the nation right now? Great question. Here’s my answer:
Manhattan took a big hit from the COVID-19 pandemic, while most other areas had a very quick recovery. Since Manhattan was late to the party, it only makes sense that it would be still going strong after the nation had fizzled out.
Inventory has remained much higher in Manhattan than nationally, which has kept prices from rising too fast. Our latest Inventory Report showed Manhattan had a 5.3-month supply of apartments for sale in August, compared to the national rate of 3.0 months for existing homes.
The record-low inventory levels of homes for sale nationwide in early 2022 led to sharp price increases, which, combined with spiking mortgage rates, have priced many buyers out of the market.
While the rise in rates has also impacted Manhattan, sales prices haven’t risen anywhere near the level of the national figure.
So, while the Manhattan market is not performing like it did in 2021, it’s still doing better than both the average of the 10 years before COVID-19 and that of the nation as a whole. Not too shabby.