Owners looking to make a killing on their apartments are getting a cold splash of reality, according to a recent report from Marketproof. While sales prices in the NYC market have indeed increased by some 43% since 2006, in many cases, sellers’ anticipation of princely profits have outpaced what the market will actually bear.
As recently as 2015, buyers often paid asking prices without much fuss -- but that appears to be changing. After peaking in 2013, sales prices in Manhattan have decreased yearly, dropping more than 20% -- and rendering the overall numbers lower than they were even in the wake of the 2008 financial crisis. The much-ballyhooed $1 million median asking price in Manhattan isn’t a thing anymore -- or at least not at the moment -- as prices have dropped 17% since last year.
Market-watchers are quick to note that this is likely more of an adjustment than a harbinger of anything truly ominous, with one market research pro calling it “a shift in the velocity of the market,” and “...more of [a] correction and moderation.”
Reasons for the adjustment cut across a number of economic factors, but the main culprits may be rising home prices that aren’t being matched with commensurate increase in incomes, and property tax deduction caps compelling homebuyers to think twice about borrowing big. Large mortgage payments look even less appetizing when they come with a sky-high tax bill as well.
But speaking of mortgages, according to a recent piece on the trend in AM New York, “There is one potential game changer in the whole equation: mortgage rates. In July 2019 the Fed lowered the current fed funds rate to 2.25 percent. If rates continue to stay low or drop further the housing market may splutter back to life and NYC may again see packed open houses. If the rates increase, however, expect sellers on lower-priced properties to follow the lead of higher-end developers — and finally drop asking prices.”