Will the state of the world affect the New York City real estate market?
The New York City real estate market continues to wait for the surge of new listings in both Manhattan and Brooklyn as expected for the spring market. However, with the recent events in the Ukraine, some are left wondering how the global impact might start to effect local markets.
The short answer is, we're not expecting to see a major impact on the New York real estate market. That said, the situation is ever-evolving so we will be keeping a close eye on things.
Here's where things stand right now:
Capital Markets
Stock and bond market volatility continues with the Russian invasion of the Ukraine and news is changing rapidly. Global markets are currently under significant pressure on multiple levels: geopolitical uncertainty, high inflation, planned interest rate increases by the Federal Reserve and the COVID/Omicron variants.
The short-term elevated volatility is expected into the spring months especially as the Fed starts increasing rates. Investors will watch world events and risk closely. However, the vortex of uncertainty will be offset by the continuing opening of the worldwide economies post COVID and positive corporate profit growth in the remaining quarters of 2022.
According to Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank – “We do not believe this is the end of the long-term bull cycle for Equities in general given our view that the profit cycle is still positive and growing, valuations are now more attractive, household and corporate balance sheets are healthy, demographics are favorable, and another major innovation wave is just beginning.”
New York City Real Estate Market
As discussed in previous newsletters, the Manhattan and Brooklyn markets continue to be driven by low inventory levels and continuing strong contract signings.?As February wraps, the real estate market continues to wait for the expected surge of new listings.
Manhattan
Manhattan inventory continues to go sideways remaining in the 5,000-unit range. Normal spring markets expect to see supply peak at the 7,000 to 7,500 range.
Contract signings remain strong and continue to absorb new listings as they enter the market. Given the lack of inventory, the leverage in the market is still tilted toward sellers. This has kept price cuts in check and within the 5% range of listing prices.
Brooklyn
As with Manhattan, the Brooklyn market is also experiencing sideways inventory. In addition, Brooklyn contract signings have pushed pending sales higher. This has caused net inventory to trend negative as buyers snap up properties as soon as they hit the market.
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