NYC Housing Market: Prices, Trends & Forecast 2023

                                               By Marco Santarelli

Here are the latest trends in the NYC real estate market as well as the statewide market. The New York State housing market has been struggling due to a continued lack of inventory and rising interest rates. According to the latest housing report released by the New York State Association of REALTORS®, closed sales dropped to their lowest point in nearly a decade. With fewer homes available for sale, buyers are facing intense competition, while sellers are struggling to find interested buyers.

Low Inventory and Rising Interest Rates Impact Sales
In February 2023, closed sales plummeted by 34.3 percent compared to the same month in the previous year, marking the lowest number of closed sales since February 2014. Similarly, new listings decreased by 15.8 percent year-over-year, and pending sales were down 8.1 percent. The inventory of homes available for sale also fell by 8.2 percent compared to February 2022, marking the 40th consecutive month that housing inventory has fallen in year-over-year comparisons.

The decline in sales can be attributed to the lack of available inventory and rising interest rates. According to Freddie Mac, interest rates increased every week during February, with the monthly rate on a 30-year fixed-rate mortgage starting at 6.09 percent and ending at 6.50 percent. As the cost of obtaining a mortgage increases, it decreases the demand for real estate, which, in turn, lowers home prices.

Declining Home Prices
Median sales prices of homes in New York State dipped by 6.3 percent from $400,000 in February 2022 to $375,000 in February 2023. The average sales price also decreased by 3.4 percent to $505,895. Homeowners, on average, received 98.4 percent of their original list price at the sale, a year-over-year drop of 1.5 percent.

Days on the market increased by 4.7 percent to 67 days, and the months supply of inventory increased by 7.7 percent to 2.8 months. The decline in home prices is a good opportunity for buyers looking to purchase their first home or for investors looking for a bargain. However, for sellers, it means having to lower their asking price or waiting longer to sell their home.

The housing affordability index decreased by 16.7% to 105 as compared to Feb of last year when it was 126. An index of 120 means the median household income is 120% of what is necessary to qualify for the median-priced home under prevailing interest rates. A higher number means greater affordability.

.  Pending Sales in New York State were down 8.1 percent to 8,593.
.  They are considered a forward-looking indicator of home sales based on     contract signings
.  Closed Sales decreased 34.3 percent to 6,147.
.  Home for sale declined by 8.2 percent to 30,308 units.
.  Prices dropped as the Median Sales Price was down 6.3 percent to               $375,000.
.  The average sales price was down 3.4 percent to $505,895.
.  Sellers received, on average, 98.4% percent of their original list price at         sale, a year-over-year drop of 1.5 percent.
.  Days on the Market increased by 4.7 percent to 67 days.
.  Months Supply of Inventory was up 7.7 percent to 2.8 months.
Market Forecast for 2023
The New York State housing market is likely to continue struggling in 2023 due to the low inventory of homes and rising mortgage interest rates. However, as the interest rates start to decline, they can increase demand for real estate and raise home prices. The National Association of REALTORS® predicts that interest rates will gradually decrease in the coming months, reaching around 5.0 percent by the end of 2023. This could help boost the housing market by making it easier for buyers to obtain mortgages and increasing demand for homes.

The New York State housing market is currently facing challenges due to a lack of inventory and rising interest rates. Home prices have decreased, making it an ideal time for buyers and investors to purchase properties. However, for sellers, it means having to lower their asking price or waiting longer to sell their homes. The forecast for 2023 remains uncertain, but if interest rates decline as predicted, it could lead to an improvement in the housing market.

NYC Real Estate Market Trends: Is it a Seller’s Market?
The following housing market trends are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded. Based on the data presented, New York City is currently a buyer’s real estate market as of March 2023. The median listing home price has decreased by 16.6% year-over-year, indicating a drop in home prices.

The sale-to-list price ratio is also relatively low, with homes selling 3.32% below the asking price on average. A buyer would prefer a sale-to-list price ratio closer to 90%, whereas a seller would always prefer scenarios that yield a ratio of 100% or higher.

Additionally, there are currently 25,863 homes for sale in New York City, indicating that the supply of homes is greater than the demand for homes. The average time a home spends on the market before being sold is 151 days, which has gone up since last month but slightly down since last year.

Despite this, there are still neighborhoods in New York City, like Tribeca, where the median listing home price is $4.3M, making it the most expensive neighborhood. Therefore, while it is currently a buyer’s market, the high prices in some neighborhoods suggest that it may still be a seller’s market in certain areas.

NYC Housing Market Report for February 2023
New York City’s real estate market has been steadily evolving due to the effects of the COVID-19 pandemic, and the most recent data from StreetEasy suggests that buyers are making a comeback, albeit with more discerning taste. However, the market is still very much in the buyers’ favor, with affordability being a top concern.

With inventory levels still below pre-pandemic levels and buyers actively competing for limited inventory, well-positioned sellers can expect strong offers. However, aggressive pricing can lead to more time on the market, and sellers should not expect the same level of competition as last year. With mortgage rates still elevated, the market forecast for 2023 suggests that affordability will continue to be a major factor in the NYC housing market, and buyers will continue to prioritize finding a home within their budget.

Additionally, the luxury market is experiencing a slowdown, with buyers taking longer to make purchasing decisions due to rising mortgage interest rates. Overall, the NYC housing market is still in a state of transition, and it will be important for buyers and sellers to remain patient and adaptable as the market continues to evolve.

Market Report February 2023

According to StreetEasy’s February 2023 Market Report, the number of newly in-contract listings in February increased by 32% compared to January, following a resurgence of buyers. However, home sales in NYC remain more modest compared to the red-hot sales market last year. Despite this, the report indicates that buyers are still actively shopping, with the average number of inquiries received by for-sale listings on StreetEasy being 9% above its pre-pandemic level in February.

Affordability is a top concern for NYC buyers, and homes that are priced out of range are struggling to find buyers. Among listings that have not yet found a buyer, homes priced 5% to 30% higher than comparable listings spent about six more weeks on the market, while homes priced more than 30% above comparable listings spent an additional nine weeks on the market.

This additional time on the market signals that sellers should not expect the same heightened competition among buyers as last year. Buyers are slowly regaining negotiating power, with three in five agents indicating that buyers are taking more time to consider a home and are making offers below the list price more often.

Another reason for the slowing sales is an ongoing inventory shortage. For-sale inventory rose 4.2% year-over-year to 16,169 homes in February this year, but current inventory levels are still 6% below their pre-pandemic levels. Furthermore, the number of new listings entering the market fell 19.6% year-over-year in February, keeping downward pressure on for-sale inventory.

However, the average for-sale listing on StreetEasy is receiving 9% more inquiries from buyers than before the pandemic, indicating buyers are competing for limited inventory. Despite the competition for limited inventory, soaring monthly mortgage payments have left buyers with little room to stretch their budgets, and sellers are less likely to receive an offer above asking than they were last year.

Nearly one in five listings on StreetEasy sold above the initial asking during the hyper-competitive shopping season last year, but in February 2023, one in 10 listings sold above asking. With affordability as a top concern, NYC buyers are showing patience in finding a home within their budget, and as a result, homes for sale are staying on the market for longer.

A typical home in NYC entered contract in 111 days, up 24 days from a year ago when the market heated up with buyers locking in low mortgage rates. The luxury market was no exception, with newly pending sales above $3.5M (the top 5% of all sales in 2022) falling sharply by 38% from a year ago.

Luxury listings on StreetEasy continued to receive strong interest from home shoppers, with the average number of inquiries up 3.3% in February from pre-pandemic levels. However, luxury buyers are taking longer to seal the deal, and the report indicates that this is likely due to the soaring mortgage interest rates.

NYC Real Estate Market Forecast 2023-2024
What are the New York City real estate market predictions for 2023? New York City has a track record of being one of the best long-term real estate investments in the U.S. The New York real estate market has been booming year over year. NYC home prices nearly doubled over the last decade. With supply and demand continuing to favor sellers, prices continue to rise year over year.

According to NeighborhoodScout’s data, the cumulative appreciation rate over the ten years has been 79.16%, which ranks in the top 50% nationwide. This equates to an annual average real estate appreciation rate of 6.00%.

According to StreetEast’s forecast, due to the higher cost of renting and elevated inflation, renter demand will continue to cool in 2023, pushing down asking rents. This relief in rent prices, however, will be slow to come by due to a limited inventory of rental units. Priced-out buyers may stay in the rental market until 2023’s spring purchasing season, keeping rents high.

Despite record-high rates and possible annual savings of $14,500 from roommates, NYC renters are prepared to pay more to avoid having roommates, according to their research. All of this suggests the rental market may cool off more slowly, despite reduced affordability. NYC homeowners will be better prepared for a possible recession.

NYC will continue to see an influx of new residents. Despite high rents, StreetEasy search data suggests the city continues to draw interest from potential new residents wishing to move from other areas. The strong demand in NYC rentals from outside the city, despite lower affordability, coincides with the city’s impressive recovery, which had restored 97% of the employment lost during the epidemic by September of this year, according to an analysis by the NYC Office of the Comptroller.

Here’s Zillow’s housing market forecast for New York-Newark-Jersey City Metro. The Fed will likely keep interest rates elevated through this year which will lead to a decline in the prices over the next 12 months. Buyers are regaining negotiation leverage, but seller reluctance will keep the balance of power from shifting completely in favor of buyers next year.

.  New York-Newark-Jersey City Metro home values have risen by 3.8% to       $568,543.
.  The New York Metro housing market forecast ending March 2024 is             positive.
.  Zillow predicts that New York Metro home values may rise by 0.1% by         March 2024.

New York’s Recovery From The Pandemic
Changes in house prices, rents, and mortgage interest rates can affect households’ income and wealth, as well as how much money they spend and on what. Housing costs and policies can also shape where people chose to live, work, and study, as well as their ability to move or change jobs. Rising house prices, by discouraging potential migrants, could significantly reduce the growth potential of the economy, shifting the balance of labor market growth from employment to wages, with a consequent deterioration in competitiveness.

When it comes to the job market and real estate, the relationship is generally correlative: when one rises, so does the other, and when one falls, so does the other. According to preliminary figures released on March 28, 2023, by the New York State Department of Labor, New York State’s seasonally adjusted unemployment rate held constant at 4.2% in February 2023.

The number of private sector jobs in New York State increased over the month by 21,200, or 0.3%, to 8,233,700 in February 2023. The number of private sector jobs in the U.S. increased by 0.2% in February 2023. New York State’s private sector jobs (not seasonally adjusted) increased by 244,800, or 3.1%, over the year in February 2023, which matched the 3.1% increase in the number of private sector jobs in the U.S.

On a net basis, the total number of nonfarm jobs in the state increased by 21,700 over the month, while private sector jobs rose by 21,200 in February 2023. At the same time, the total number of nonfarm jobs in the nation increased by 311,000, while private sector jobs increased by 265,000.

.  New York City’s unemployment rate held steady at 4.2%.
.  Outside of New York City, the unemployment rate increased from 5.3% to 5.4%.
.  The number of unemployed New Yorkers decreased over the month by 1,200, from 402,600 in January to 401,400 in February 2023

New York Rental Market Report
The Zumper New York City Metro Area Report analyzed active listings across the metro cities to show the most and least expensive cities and cities with the fastest growing rents. The New York one-bedroom median rent was $2,313 last month. New York City was the most expensive market with one-bedrooms priced at $3,370 whereas Newburgh & East Orange were the most affordable cities with rents both at $1,480.

Here are the places where it makes sense to invest in rental properties in the New York City Metro Area. These are the places where the demand for rentals is growing strong in 2023.

The Fastest Growing Cities For Rents in New York City Metro Area (Y/Y%)

.  Jersey City had the fastest growing rent, up 33.5% since this time last year.
.  West New York saw rent climb 26.7%, making it second.
.  Stamford rent was the third fastest growing, jumping 24%.

The Fastest Growing Cities For Rents in New York City Metro Area (M/M%)

.  Union City had the largest monthly rental growth rate, up 4.9%.
.  Secaucus rent grew 4.8% last month, making it the second fastest growing.
.  Poughkeepsie was third with rent climbing 4.6%.

Where to Buy a House in NYC?
New York is dominated by renter-occupied one or two-bedroom apartments. 76.75% of New York’s dwellings are rentals. As per Neigborhoodscout.com, a real estate data provider, one and two-bedroom large apartment complexes are the most common housing units in NYC. Other housing types prevalent in NYC include single-family detached homes, duplexes, rowhouses, and homes converted to apartments.

The New York housing market has affordable townhomes. New York’s single-family homes account for just 1.15% of the city’s housing units. During the latest twelve months, the New York real estate did cool off. However, the cumulative appreciation rate over the ten years has been 38.81%, which ranks in the top 30% nationwide. Evaluate the specifics of the NYC housing market at the time you intend to purchase. Hiring a local property management company can help in finding tenants for your investment property in NYC.

New York City’s housing market is one of the most costly and competitive in the country. There are 237 neighborhoods in New York (as per Realtor.com). Tribeca has a median listing price of $3.9M, making it the most expensive neighborhood. Riverdale is the most affordable neighborhood, with a median listing price of $360K.

There are some buyer-friendly neighborhoods in New York City where buyers have a bit more negotiating power in neighborhoods as compared to sellers. Jackson Heights is one of New York City’s most buyer-friendly neighborhoods at the moment with home prices under $700,000. Other buyer-friendly markets with a median sales price below $700,000 include Rego Park, where the median sales price in Oct 2021 was $389K, trending down -by 8.9% year-over-year. The sale-to-list price ratio was 100 percent.

The median list price of homes in Sheepshead Bay was $499K in Oct 2021, trending down -by 5% year-over-year. The sale-to-list price ratio was 97.72 percent. The median list price of homes in East Flatbush was $650K, trending up 8.9% year-over-year. The sale-to-list price ratio was 100 percent. The median list price of homes in Brighton Beach was $569K, trending up 16.4% year-over-year. The sale-to-list price ratio was 97.03 percent.

Buyers have a bit more negotiating power in neighborhoods where the median home price falls between $700,000 and $1 million. In areas like Midtown East, where the median sales price is $872,500. Homes in Midtown East sold for approximately the asking price on average in Oct 2021. The other neighborhoods best for buyers looking to spend between $700,000 and $1 million are Bayside, where the median sales price in Oct 2021 was $720,000 and the sale-to-list price ratio was 99.37 percent; Gravesend ($684,500, 96.98 percent); Flushing ($838,000, 96.38 percent); and Bay Ridge ($499,000, 98.14 percent).

All of this could vary from time to time and can be checked on Realtor.com. Check out some of the best neighborhoods for investing in New York for the long term→ These neighborhoods have been selected from all five boroughs.