July Market Recap

July was a slow month in Manhattan though things seemed to perk up slightly toward the end of the month as interest rates stabilized and even came down and the stock market rallied. The current activity levels seem to have slipped into the usual seasonal market slowdown this time of year and seem to be more indicative of pre-2020 levels. While 2021 was a gangbuster year for the Manhattan market, looking back at 2019 as a comparison point provides context: Total contracts signed in July 2022 and 2019 are comparable - 774 Manhattan contracts were signed in 2019 versus 824 this year, and the luxury market is significantly stronger with luxury contract volume 50% higher in 2022 than 2019 (and only down -15% versus 2021).

Overall contracts and inventory rates were fairly well-matched throughout the city, although as per usual Downtown Manhattan contracts (28%) slightly exceeded inventory (24%), while Midtown East listings made up 19% of inventory but only 16% of contracts signed. While median sale prices remained relatively stable, we would not expect to see the effects of the Summer slowdown until more of those sales actually close in the coming months.

In Brooklyn, average and median sale prices tracked another month of increases, although PPSF figures were buoyed by notably strong PPSF figures in the townhouse market (+15.6% vs. July of last year). Anecdotally, we are still seeing bidding wars and incredibly low inventory levels with all our townhouse buyers, and inventory levels in the most in-demand areas for all product types has remained quite low.

So while marketwide contract activity in BK shows a dramatic decline compared to July of last year, looking closer at the geographic distribution shows that there is a big disparity among regions. North-West Brooklyn - which includes high-demand neighborhoods like Carroll Gardens, Cobble Hill, Boerum Hill, Park Slope, Prospect Heights & Fort Greene - represented just 22% of inventory but 35% of signed contracts; conversely, South and East Brooklyn made up a combined total of 67% of inventory, but only 55% of contracts.

While it remains to be seem how the fall market will play out, as long as interest rates and the stock market stabilize, especially in Manhattan, we might be looking at a return to pre-Covid normalcy and seasonality. There should be a bump in inventory mid September through October, and inventory leftover from the Summer will likely resort to price reductions.

Mortgage rates fell this week as concerns about a recession outweighed worries about inflation. (WASHINGTON POST)

The Manhattan sales market has slowed down. While it may seem dramatic, the data suggests the market is not crashing, but simply returning to normal, seasonal volume. In other words, the slowdown appears to be more of an issue of comparison, and less of a macroeconomic shift. It’s not a crash, it’s a reversion to the mean. (FORBES)

Nearly 2 million square feet of office space was leased in Midtown in July, a three-fold jump from July 2021 and more than in any month since December 2018. (THE REAL DEAL)

The economic policy bill will likely maintain SALT deduction caps and end the tax break on carried interest deductions which benefits private equity and hedge fund managers. (BLOOMBERG)