Manhattan Real Estate Market Update August 2022

Posted by Wei Min Tan on August 11, 2022

Key points for August 2022 manhattan Real Estate Market Update:

1) Record rents

2) Slow summer months

3) Is the activity resuming?

Record rents

According to Miller Samuel June Rental Report, the average rental price set a record high of $5,058, up 29% from a year ago. Since 2021, rents have been increasing. However, keep two things in mind. First, this 29% increase is influenced by many pandemic rents. During the pandemic, rents have dropped by 25-30%. Second, rents in Manhattan have been flat for about a decade, so it’s normal for rents to rise, especially when we’re in an inflationary environment where inflation is at its highest level in 40 years.

From a landlord’s perspective, increased rents are a good thing because rental yield is improving. But from a tenant’s point of view, housing is now much more expensive. Many of those benefiting from pandemic rents could not afford to renew their current housing due to the rent hikes.

The rental price per square foot increased by 26.5% compared to a year ago. Meanwhile, the number of new leases fell by 46.7%. This is because there is very little inventory and tenants are fighting over the limited number of units available. The inventory of registrations was 6,433, or 45.7% less than last year. from manhattan vacancy rate was 1.9%, significantly lower than the US average, which is around 9 or 10%.

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Slow summer months

Supply was at its lowest in early 2022, then increased slightly in June. Currently, the supply has decreased again. This is partly because we are in the slow summer months of July and August. Many are on summer vacation and as the weather is hot and humid there is less viewing activity. Many sellers wait until the fall to list their property, which explains the low supply and slow activity.

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Activity resumes?

The Market Pulse always shows that we are in a seller’s market. Meanwhile, the pace of weekly contracts signed declined in June. But over the past 2-3 weeks, activity has started to pick up again (red circle in the chart above). In the spring of 2021, we were seeing the market at its fastest pace. And in the spring of 2020, during the Covid-related containmentwe had the slowest pace of activity.

We should see more activity in the fall. The overall market slowed due to rising mortgage rates. For context, mortgage rates have nearly doubled over the past year. In the Manhattan market, about 50% of buyers need mortgage financing, while 50% buy entirely in cash without needing financing. The market slowdown is an opportunity for buyers, especially for those who buy all cash.

What we do

We focus on of global investors buy condos in Manhattan for portfolio diversification and long-term return on investment.
1) Identify the right purchase according to the objectives
2) Manage the buying process
3) Rent the property
4) Manage tenants
5) Market the property during the eventual sale