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Noble Black, broker at Douglas Elliman, keeps getting calls from New Yorkers looking to buy an apartment. They all tell him the same thing: that they are somehow looking and to call them if he spots a place at a bargain price that ticks all their boxes. Greathe thinks, I’m just gonna add you to the list. “I have a list of 50 people like that,” he says, but there’s a problem. “The market is not dead. This is not the market where sellers should sell off. »
After a year like this, buyers are desperate for good news. If you wanted to buy a house in New York, or really almost anywhere, 2022 just kept getting worse – house prices were skyrocketing, reaching a record $1.25 million median for an apartment in Manhattan just before mortgage rates hit highs this generation of buyers have never seen (7% interest on a 30-year fixed-rate mortgage, anyone? ). More recently, rates have fallen slightly to 6.31% and prices for Manhattan apartments began to fall too. But, as Black says, it’s not the start of a bigger change. What many real estate agents, economists and mortgage lenders agree on is that there could be a window early next year to buy a home at current rates (or when rates could drop further late in 2023). But barring a catastrophe (like a total recession), the chances of getting a house at a “sell-off” price are slim to none.
Some realtors, however, are still trying to make 2023 happen. “Now is the best time to buy in the next three years,” Mihal Gartenberg, broker at Coldwell Banker Warburg, tells his clients. The way she see it, interest rates will be rise in the spring, but some sellers are desperate now – like the backers of new developments who started offering its customers free storage and parking: “all the bells and whistles,” she says. Jeremy Kamm, another Coldwell Banker Warburg broker, agrees. He had to lower the price of a Brooklyn Heights duplex by 5% this fall before it sold and sees next year as “an opportunity for buyers to jump in knowing there are fewer competition, knowing that sellers are worried about the persistence of their ad”.
But most sellers are unlikely to make dramatic moves in 2023. Things have slowed considerably this year already. In November by Douglas Elliman report, Jonathan Miller’s business had less than half the number of homes for sale as there were in November 2019. The appraiser sees two reasons for this: Sellers don’t want to give up a low mortgage rate for a lower one. higher, or they just sold their house in the boom. “Because rates were so low for so long, that inventory was wiped out,” Miller says, so those considering selling have the luxury of buying time. “It takes about 12 to 24 months for an owner to capitulate to market conditions without feeling like they’ve left money on the table.” He believes that when external factors like higher mortgage rates drive down demand, prices don’t fall quickly. And right now, prices are driven by this low supply issue.
Yet StreetEasy sees ads sticking around longer and seeing their prices drop more often. In November, for the first time since 2019, ads have been up for an average of 75 days before entering into contract, and their prices have been reduced more often than in November last year. As for next year, Miller sees “no change” in prices, but thinks interest rates will fall to a level where buyers can stomach the numbers – just below 6%. Rich Sharga, executive vice president of market intelligence at ATTOM, predicts the same thing: house prices plateau in New York and the mortgage rate drops slightly to over 5%. This will help some New Yorkers make the leap to buying a home. Meanwhile, Sharga thinks buyers will readjust their expectations in other ways: “These potential buyers may now be looking further outside the metropolitan area, smaller places, older places, trying to figure out what ‘they can really afford.”
This is exactly what some real estate agents encourage their clients to do. Leonard Steinberg, an executive at Compass, says buyers need to stop looking for trendy interiors and start looking for good bones. “I call it Calacatta Marble Madness,” he says. “It’s almost like they’re looking at a house like they’re looking at a mini dress.” Deborah Rieders, a Corcoran broker who specializes in townhomes, says even this fall her clients were making what she considered high bids for remodeled properties and still bidding higher. So she showed them that there is value in repairers. “I think you can get these houses at a slight discount right now, because people are afraid to work,” she says.
But most New York home prices are still a fantasy for many residents, and the city has been trying to change that bit by bit, first by increasing supply: this year, the city’s Housing Authority built 18 houses in Brooklyn and Queens, funding an affordable co-op in Chelsea and funding a task force to push the so-called zombie houses back on the market. Meanwhile, the city’s Department of Housing Preservation and Development is trying to spur buyers, spending a record $9 million on $100,000 forgivable loans. Do the math, and it’s only 90 families.
More recently, the mayor, governor and chairman of the council released more ambitious plans that could make a long-term difference. This month, the mayor announced a “moonshot” to build half a million homes over the next decade – more than double what New York has added in the past ten years – in part by rezoning a strip of the Bronx near two Metro-North stops planned to allow 6,000 new homes. Another rezoning The plan would turn light industry wedged between rapidly gentrifying neighborhoods along Brooklyn’s Atlantic Avenue into mixed-use developments that could include apartments. Governor Hochul backed the plan saying, “We will need every community, town and city to do their part to make housing accessible and affordable for everyone.
These kinds of announcements may seem like empty politics, but for people who have been pushing that line for years, they come as a bit of a shock. “The fact that the city and the state are politically aligned, and both focused on housing, is quite unusual,” says Sarah Gerecke, a fellow at the Housing Finance Policy Center. “There may be a lot more support for some of the changes needed to house more people.”
Yet these plans will take years to build. And New Yorkers are ready to buy now. “I still think there’s pent-up demand from people on the verge of buying in the spring who have been thwarted by the spike in rates,” Miller says. This request comes not just from New Yorkers, but from anyone who wants to become a New Yorker, which means that even if prices go down nationally next year, they might not go down here.
Black, the Elliman broker, thinks what will likely happen is that the buyers will give in first. “Eventually, people get used to higher tariffs. Tired of waiting, something happens that excites them,” he says. In short, for unpriced buyers, they will abandon their real estate fantasies and settle for less to do what so many others have done before them: stretch their finances to afford a slice of reality – maybe a post-war shoebox. with a view of a brick wall but, preferably, with good bones.