What Should New York Homebuyers Expect in 2023?

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Photo-Illustration: Curbed/Getty Images

Noble Black, a broker at Douglas Elliman, constantly gets calls from New Yorkers looking to buy an apartment. They all tell him the same thing: that they look like one and to call them if they see a place with a good price that checks all their boxes. Bighe thinks, I’ll just add you to the list. “I have a list of 50 people like that,” he says, but there’s a problem. “The market is not dead. This is not the market where sellers should be selling hot.”

After a year like this, buyers are desperate for some good news. If you’re looking to buy a home in New York, or really just about anywhere, 2022 continued to get worse — home prices soared, reaching a record average of $1.25 million for a Manhattan apartment just before mortgage rates were rising to the highest levels this generation of buyers has ever seen (7 percent interest on a 30-year fixed-rate mortgage, anyone?). Recently, rates have fallen slightly to 6.31 percent, and prices for Manhattan apartments have also begun to fall. But, as Black says, this is not the start of a bigger change. What many realtors, economists and mortgage lenders agree on is that there may be a window early next year to buy a home at today’s rates (or after rates potentially fall later in 2023). But, barring a catastrophe (like an all-out recession), the chances of getting a home at a “fire sale” price are slim to none.

However, some realtors are trying to make 2023 happen. “It’s the best time to buy in the next three years,” Mihal Gartenberg, a broker at Coldwell Banker Warburg, tells her clients. The way she sees it, interest rates WILL it grows in the spring, but some sellers are desperate now – like backers of new developments that have started throwing free storage and parking at her customers: “all the bells and whistles,” she says. Jeremy Kamm, another broker with Coldwell Banker Warburg, agrees. He had to drop the price of a Brooklyn Heights duplex by 5 percent this fall before it sold, and sees next year as “an opportunity for buyers to jump in knowing that there’s less competition, knowing that sellers are worried about their continued listing”.

But most vendors probably won’t make dramatic moves in 2023. Things have already slowed down significantly this year. In Douglas Elliman’s November report, Jonathan Miller’s firm counted less than half the number of homes for sale it had in November 2019. The appraiser sees two reasons for that: Sellers don’t want to give up a low mortgage rate for a higher. , or they just sold their house in the boom. “Because rates were so low for so long, that inventory got wiped out,” Miller explains, so those thinking of selling have the luxury of time. “It takes about 12 to 24 months for a homeowner to capitulate to market conditions without feeling like they left money on the table.” He believes that when external factors like higher mortgage rates push demand, prices don’t fall quickly. And now, prices have been driven up by this low supply problem.

However, StreetEasy sees that listings stay longer and their prices drop more often. In November, for the first time since 2019, listings sat an average of 75 days before going into contract and their prices were reduced more often than in November last year. As for next year, Miller sees “zero change” in prices, but thinks interest rates will fall to a place where buyers can afford the numbers — just below 6 percent. Rich Sharga, executive vice president of market intelligence at ATTOM, predicts the same thing: home prices will rise in New York City and mortgage rates ease to just over 5 percent. This will help some New Yorkers take the plunge to buy a place. Meanwhile, Sharga thinks buyers will readjust their expectations in other ways: “These potential homebuyers are now probably looking further away from the metro area, smaller places, older places, trying to understand what they can really afford.”

This is exactly what some realtors are encouraging their clients to do. Leonard Steinberg, an executive at Compass, says buyers should stop looking for trendy interiors and start looking for good bones. “I call it Calacatta marble folly,” he says. “It’s almost like they’re seeing a house the way they’re seeing a mini dress.” Deborah Rieders, a broker at Corcoran who specializes in townhomes, says that even this fall, her clients were making what she considered high offers on renovated properties and still making more offers. So, she has shown them that there is value in the upper part of the fixation. “I think you can get those houses at a slight discount now because people are afraid to do the work,” she says.

But most New York City home prices are still a fantasy for many residents, and the city has tried to change that in bits and pieces, first by increasing supply: This year, the city’s Housing Authority is building 18 homes. in Brooklyn and Queens. , funding an affordable co-op in Chelsea and funding a task force to push so-called “zombie” homes back on the market. Meanwhile, the city’s department of housing preservation and development is trying to entice buyers, spending a record $9 million on $100,000 in forgivable loans. I do the calculations and there are only 90 families.

Recently, the mayor, governor and council president released more ambitious plans that could make a difference in the long run. This month, the mayor announced a “moon shot” to build half a million homes over the next decade — more than twice what New York added over the past ten years — in part by rezoning an area of ​​the Bronx near two subways. planned. The North pauses to allow 6,000 new homes. Another rezoning plan would turn light manufacturing tied between high-speed neighborhoods along Brooklyn’s Atlantic Avenue into mixed-use developments that could include apartments. Governor Hochul supported the plan, saying, “We’re going to need every community, every town and every city to do their part to make housing accessible and affordable for everyone.”

These kinds of announcements may seem like empty politics, but for people who have pushed this line for years, they are somewhat shocking. “The fact that the city and the state are on the same political line, and both focused on housing, is quite unusual,” says Sarah Gerecke, a fellow at the Housing Finance Policy Center. “There could be a lot more support for some of the changes that are needed to get more people housed.”

However, these plans will take years to build. And New Yorkers are ready to buy now. “I still think there’s pent-up demand from people who were going to buy in the spring who were put off by the rate hike,” Miller says. This request comes not only from New Yorkers, but from all those who love DONE a New Yorker, which means that even if prices fall nationally next year, they may not fall here.

Black, the Elliman broker, thinks what will probably happen is that the buyers will break out first. “Eventually, people learn at higher rates. Tired of waiting, something happens that excites them,” he says. In short, for buyers who don’t have high prices, they will give up their real estate fantasies and settle for less to do what many have done before them: downsize their finances to afforded a sliver of reality – maybe a post-war shoebox with a brick wall look, but preferably one with good bones.