Despite some decreasing sales in the luxury condominium sector, general sales were strong in the first quarter of 2022. There are enough offers on the market, and the increase in lending rates has had an additional spurring effect.
A large volume of buyers rushed to the market, trying to buy property with a mortgage while conditions were more profitable.
Elite residential real estate market
Market data shows that in February and March 2022, the number of transactions for premium housing worth more than $15,000,000 has decreased compared to previous periods. Especially in comparison with the fourth quarter of 2021.
Wealthy buyers prefer to purchase condominiums starting at $10,000,000 preferably in a new building and on a turn-key basis. At the same time, cooperatives with starting prices of $10,000,000 are being sold rather slowly. Usually, this covers periods of up to a year and with several reductions in the asking price.
The nature of consumer demand and new offers in the market
Particularly, buyers are interested in:
- Small-sized apartments;
- Large-sized apartments, but at affordable prices;
- Anything for sale in popular neighbourhoods with limited offers such as Greenwich Village and Park Slope.
Demand in the market has been actively growing since last summer. The number of housing units decreased rapidly, resulting in significant price increases.
- For the first time in this period, March 2022 showed a noticeable net increase in the amount of real estate supply in the market. The ratio of units put up for sale compared to closed transactions has shifted towards the first numeric value.
- April has always been a month when a lot of new offers enter the market. However, there were no significant changes in April 2021. At that time, only few new properties were on the market. So, the growth in March is a good signal of the market recovery.
Rising interest rates and the rental sector
To fight rising inflation, the US Federal Reserve System plans to raise lending interest rates gradually. Last month, the growth in rates led to a significant increase in buyers.
At the moment, the Fed is preparing for a new rise. It is likely that the process will be repeated regularly throughout 2022.
With new offers on the market, and with low prices, we can expect that the number of buyers will continue to grow in the second quarter of this year.
The rise in consumer demand is clearly noticeable in the real estate rental sector. There is high competition among potential tenants, especially for rental contracts of $10,000, $20,000, and $30,000 a month. The areas most in demand are the neighbourhoods of Brooklyn, Manhattan and Queens.
The practice is returning again, according to which it is the tenants, and not the landlord, who must pay the full 15% commission for signing rental contracts.
In general, the market should expect high activity, although it is likely not to reach the heights of spring 2021.