View from the Top: Is the real estate market back to normal?

Friday, Jun 9, 2023 By CityRealty Staff, CityRealty contributor

In View from the Top, CityRealty examines market data and recent transactions to offer an industry expert's perspective on New York's ever-changing real estate market.

As the news cycle drags us around by the nose, and the extremity of trends gets blown up in the internet echo chamber, it’s been easy to miss one thing: Numbers indicate that New York real estate is getting back to normal.

Yes, rents are up. But New York City rents are notoriously high, unless there is a financial crisis or a pandemic. Not to mention “rent season” is upon us, which can’t help but drive rents up.

Manhattan monthly rent price indicators (Miller Samuel)

On the sales side, it’s true that interest rates have been steadily inching up over the past several months. But after so many months of interest rates at all-time lows, it can be easy to forget that 2.75% on a 30-year fixed mortgage is highly unusual.

30-year mortgage rates (Freddie Mac PMMS)

We often talk about supply and demand when discussing real estate, and the numbers show both at typical levels. This chart from UrbanDigs shows the range of available units of all types and prices, with the band between 6,000 and 8,000 units colored in to demonstrate how, the majority of the time, the available supply falls within that range.

Manhattan supply (UrbanDigs)

Demand, too, is inching back to a normal range. In an UrbanDigs chart showing both the long-term average and actual contract activity from 2008 to the present day, it’s possible to see major disruptions during events like the Great Recession and the recent pandemic. Some of us remember that it didn’t feel “normal” in early 2010, just like it might not now, but the numbers show that it is.

Manhattan contract activity (UrbanDigs)

Add in the fact that the New York labor market has almost fully recovered, and it’s time to drop the Chicken Little attitude and realize we are back to normal. If you are looking to buy, and you plan to hold it for a bit, there are very good odds that you’ll make money if history can tell us anything. If you’re looking to sell, there are buyers out there. You can block out the noise about empty office towers: New Yorkers are alive and well, living and working (some days from home) here in the city.