And just like that... 2021 is almost over! We would like to wish you and your family all the happiness, health and prosperity in the upcoming year. Thank you for making this year so great!
Before the clock strikes midnight, let's take a quick look at what's in store for New York City real estate in 2022.
2022 New York City Real Estate Predictions
The last 12 months saw the New York City real estate market soar to levels few could have predicted during the pandemic which ravaged the previous year. Month after month of record sales and increasing rents were fueled by low-interest rates and a construction boom throughout the city, particularly in Downtown Brooklyn where gleaming condo towers have seemingly sprouted like mushrooms. If you’re sitting on the sidelines, expecting things to cool down in 2022, you could be disappointed. All signs point to more of the same.
All markers seem to indicate that, even with a slight interest rate nudge by the Fed, demand for Manhattan and Brooklyn housing remains extremely high, according to the StreetEasy Price Index. Although it could slow slightly compared to 2021, the market will continue to favor sellers and landlords.
High Demand for Luxury to Persist
There’s a particularly insatiable demand for luxury real estate which will only continue if the stock market continues to do well and travel restrictions allow foreign buyers back in en masse. StreetEasy suggests that new buyers might have a better opportunity to get into the market at the bottom end, with homes priced below $500,000 seeing drops during Q3 2021. However, this doesn’t appear to be reflected with new construction condos with many studios and 1 bedroom condos in Brooklyn, selling out, leaving the larger units to sell last.
UrbanDigs.com suggests that if interest rates go up significantly in the second half of 2022 to curb inflation, prices for luxury and new development condos could stagnate, which will be compounded if foreign buyers decide to hold off on investments.
Supply Chain Concerns
The real estate analytics firm also suggests that should supply chain issues persist and construction materials are hard to come by, the demand for renovated and new condos and homes would increase while properties without a renovation may sit on the market longer, causing the price gap between the two types to increase.
However, unlike some other 2022 predictions, UrbanDigs suggests that Q1 could see a slower luxury deal volume based on the number of properties for sale before larger developments are completed. Any bump in sales in early 2022 would be attributed to deals signed in 2021 closing.
The sheer volume of new condos being built would see them close the gap on co-op transactions in the city, even though 75% of housing in NYC are co-ops.
Townhouses Will Continue to Soar
Despite some high-priced deals in 2021, townhouses still haven’t reached their lofty number of 2015, so expect brownstones and limestones throughout the city to keep increasing in price. There’s been a strong demand for them throughout 2020 and 2021 as buyers looked for more space during the pandemic and lockdown restrictions. Should Covid issues and newer variants persist, so will the demand for townhouses.
Pricey Neighborhoods Will Stay Hot
As subway ridership increases along with restaurant attendance, the most expensive neighborhoods in Manhattan (Hudson Yards, Tribeca, Soho) and Brooklyn (Dumbo, Downtown Brooklyn, Fiske Terrace, Carroll Gardens and Vinegar Hill ), will, according to StreetEasy, continue to be the most expensive.
Rental Trends for 2022
- Despite a slight lull in the market in Q1 2022, the rental market will become piping hot during the summer of 2022 as more people move back into the city.
- As large rental buildings throughout Brooklyn are completed expect to see inventory increase and then decrease as they are filled.
- Should rental prices continue to rise, expect lower-paid residents to move further out to where cheaper prices are, while higher-paid jobs will fill the void, especially since many of these jobs seem to demand that employees work from company offices.
New York City’s real estate landscape is forever changing and that has particularly been true over the last few years. Neighborhoods such as Long Island City, Williamsburg, Dumbo, and now Downtown Brooklyn are hardly recognizable from what they were a few years ago. The demand for luxury condos has been fueled by a buoyant stock market and high-paying jobs in finance and tech.
Should this continue in 2022, with interest rates remaining low, expect more of the same. The great unknown is, of course, our old nemesis, Covid-19. Should a new variant emerge, illnesses and fatalities increase, city dwellers could once again look to escape to the ‘burbs and beyond while foreign investors will have to curtail their plans to buy. But that’s a worst-case scenario, and as we’ve seen from the first time Covid ravaged the city, New York always bounces back.
