With skyrocketing rents and a slowdown in the sales market, some New Yorkers may find themselves at a crossroads as they consider renting versus buying. Others are looking to understand where opportunities lie. Here are some insights into the rental and sales market in Brooklyn and Manhattan.
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Interest Rates Continue to Decline: Interest rates have come down almost a full percentage since the 30-year fixed-rate mortgage hit its recent high of 7.24% in November. Adjustable rate mortgages (ARM) are an excellent option with interest rates in the 5.25% range. Some lenders can bring your interest rate below 5%.
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Seasonality Returns: As we move further away from the start of the pandemic to a sense of normalcy, the real estate market is too. Both the rental and sales markets are returning to their typical seasonal patterns with the sales market just entering its busy season and the rental market following close behind in the spring.
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Rental Market, Still Going Strong: The Manhattan rental market had been expected to level off this year however, last month's median rents and new lease signings set a record for the month of January despite an increase in inventory from a year ago. While one month does not indicate a trend, activity was higher than expected. As a result, don't be surprised if rents increase or remain flat. Meanwhile, keep an eye on Brooklyn rental activity. While Brooklyn rents increased, new leases decreased over 20% from a year ago which may be a sign of waning demand.
- Sales Market Offers Opportunity: The Manhattan sales market has been a buyer's market offering opportunities for those who would prefer to invest in a purchase rather than rent. Buyers can negotiate more favorable terms, faceless buyer competition, and can negotiate on price. The window of opportunity will be short as we see indications of the sales market turning around. Those purchasing now will reap the benefits of the current market rather than those who wait another month or two. In Brooklyn the market has been in a state of equilibrium, favoring neither buyers nor sellers. Inventory remains tight with multiple buyers attracted to renovated properties located in desirable locations.
Opportunities exist in Manhattan for buyers entering the market now. The Brooklyn rental market may follow suit should demand for new leases continue to decline. Remember, each neighborhood and market segment offers different possibilities due to the hyper-local nature of real estate. Professionals such as myself can provide additional insight into your desired neighborhood and price range.
