July 2022 Manhattan Property Market Update
Posted by Wei Min Tan on July 21, 2022
The key points for the July 2022 Manhattan Property Market Update are:
- Record median sales price and highest rents ever
- Moving away from seller’s market
- Opportunity in completed new developments
Record median sales price and highest rents ever
In Q2, 2022, median sales price rose to a record $1.882 million, up 5.8 percent compared to Q1 and up 14.1 percent compared to prior year. The price per square foot is still not as high as in 2017, but the median price is the highest ever. Number of sales went up by 9.4 percent compared to a year ago to 1,768. Listing inventory was up by 18 percent compared to the prior quarter, but supply is still low.
The 40-year high inflation and increased mortgage rates made it a lot more expensive for buyers, thus, the rental market is the hottest it’s ever been. According to Miller Samuel’s June 2022 rental report, rental price per square foot increased by 26.5 percent to $82.18, while average rental price increased by 29 percent to $5,058 compared to prior year. Vacancy rate was 1.90 percent, compared to 6.69 percent a year ago.
In the sale market, sale volume is decreasing because of high mortgage rates. The slowdown is more pronounced in the sub $2 million segment.
Weimin’s article: Manhattan Condo Historical Price Trend
Moving away from seller’s market
Supply went up a bit in June and right now it’s coming down again because we’re in the summer months. Summer is a slow season in Manhattan because of summer vacations. Many sellers would delay a sale until the fall when the market picks up again.
We are still in a seller’s market but are moving towards neutral. Why? It is because mortgage rates have roughly doubled compared to a year ago. It’s a lot more expensive for buyers needing financing, and 50 percent of buyers in Manhattan need financing. That is another reason why the rental market is the hottest it’s ever been and rents are at record levels
The 30-year mortgage rate in 2021 was around 3 percent. Currently it’s at 5.51 percent. It doubled, which is making it a lot more expensive for buyers needing financing. The sub $2 million segment, which represents studios and one bedrooms, is much slower relative to the $2 million and above (two bedrooms and larger) segment.
Opportunity in completed new developments
New development sales increased by 26.7 percent compared to last quarter and 101.8 percent compared to prior year as buyers took advantage of the last remaining developer concessions. Buyers able to close all-cash should buy new developments that can close immediately and take advantage of the record high rents.
This is a great opportunity because buyers can get concessions from developers while getting a brand new property. If the buyer is intending to rent out the apartment, the buyer can take advantage of record high rents where there’s almost no rental inventory and good units are snapped up in a day.
New development sales are strong and there is an opportunity to capitalize on new developments that are completed. They have to be completed so that they can close in 30 or 45 days, not new developments where you have to wait one or two years for completion because we don’t know where the rental market will be then.
Weimin’s article: New Launch Condo Projects in Manhattan
What We Do
We focus on global investors buying Manhattan condos for portfolio diversification and long term return-on-investment.
1) Identify the right buy based on objectives
2) Manage the buy process
3) Rent out the property
4) Manage tenants
5) Market the property at the eventual sale