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After a torrid two-year spike in sales and prices in 2020 and 2021, the housing market in the New York metropolitan
region downshifted in the fourth quarter of 2022. Sales fell dramatically from last year’s all-time highs, hampered by
a sharp rise in interest rates, “sticker shock” at home prices, and a lack of sellable inventory. But even with the market
slowing down, prices continued to appreciate, reaching new all-time highs throughout the region.
– Joe Rand, Chief Creative Officer at Howard Hanna | Rand Realty
The Market Overview:
Sales fell dramatically from their all-time highs of 2021 but remained consistent with their pre-COVID-Boom levels. Sales fell sharply over the past year, dropping about 26% in Westchester and the Hudson Valley, 31% in Northern New Jersey, 22% in Bronx County, and 31% in Fairfield. But the story is more mixed if you look at the transaction levels in our 2019 “control year,” before the market stalled during the COVID lockdowns and then surged in mid-2020 once those lockdowns were lifted. If you look at the 2019 sales, you can see that closings are basically similar to what we saw before the COVID Boom.
Even with sales slipping, prices continued to hit all-time highs through the end of 2022. The 2022 appreciation capped a three-year surge in prices that really started pre-COVID, but accelerated dramatically following the lifting of the COVID lockdown restrictions. If you look at the prices from that 2019 pre-COVID control year, prices are up sharply throughout the region: rising 40% in Westchester and the Hudson Valley, 27% in the Bronx, 59% in Fairfield, and 34% in Northern New Jersey.
Inventory came up a bit in the fourth quarter but still remains near historic lows. Inventory has fallen dramatically over the last three years to the point that we only have about 2.0 months of homes for sale in most of our markets. That’s incredibly low by historical standards. And that’s why we are relatively bullish on prices. It’s just basic economics. Even if buyer demand falls, this restricted supply should prop prices up and continue to drive appreciation throughout 2023.
As you can see, we are relatively bullish on the future of the market. Basically, we think that the market is returning to a pre-COVID state and are projecting that 2023 sales will track near 2018-19 levels.
We know that many of our clients, and even our colleagues, are anxious about the near future of the housing market. Much of that anxiety stems from the highly-charged media coverage we’ve seen over the past six months, which has amplified vivid narratives about (1) rising interest rates, (2) a dramatic sales decline, and even (3) industry layoffs by large public real estate and mortgage companies. But we believe that this bearish case is overstated and that these narratives are misleading. We all know that the media (particularly social media) loves a scary story, and narratives involving the “collapse of the housing market!” make for good engagement and eyeballs. That’s one of the reasons we’ve been putting out this Quarterly Market Report four times a year for over 20 years because we think it’s important for our clients, colleagues, and community to get an objective, facts-based analysis of the housing market.
If you have any questions about the current state of the real estate market, please get in touch with me.
Download the full reports on the links below:
