Welcome to this second edition of the “Upper West Side Real Estate Market Bulletin”, a monthly digital newsletter that covers the state and direction of our local real estate market.
It will feature three unique aspects:
- Focus on our local Upper West Side residential real estate market;
- Identification and evaluation of the main forces driving our market; and
- Clear and simple language welcoming to our lay readership.
Our current market languishes in a state of caution. Sales volumes and prices decline as a worried market witnesses worsening forces driving property sales and price levels, which are explored below.
The national inflation rate has skyrocketed over the past year. The costs of food, gas and oil are forcing homeowners to divert funds they could normally have applied to mortgages and down payments on these now more expensive essentials. Housing demand will likely fall, as a result, as will house prices and resulting home sales.
President Biden is planning a trip to Saudi Arabia to release more oil and gas reserves to the global market, but the success of that effort is hard to predict. Some economists suggest that a global recession is not unlikely. Be that as it may, the persistence of high inflation rates will continue to weigh on our real estate market.
The Covid disruption of supply-side distribution channels continues to manifest itself in inflationary price levels. The easing of these inflationary pressures seems to be slower than expected, maintaining historically high rates and difficult economic growth.
Mortgage rates have nearly doubled over the past year largely because the Fed, trying to stimulate a Covid-19-stricken economy, pumped excessive amounts of money into the economy, driving demand of goods exceeding supply and an escalation in prices. Aware of its mistake, the Fed has since reversed its policy of easy money but has not yet released mortgage rates, maintaining the brake on our real estate market.
Midterm elections could result in a Republican takeover of the House and Senate. This would likely result in Biden’s agenda being blocked for the rest of his term, including the January Committee. But what impact would that have on GDP growth? Although Democratic administrations have historically recorded higher GDP growth than Republican administrations, the projection of GDP performance is fraught with uncertainty. And uncertainty, we all know, breeds inaction when it comes to real estate transactions.
What do the tea leaves say?
For our purposes, the tea leaves are the UWS median sell price charts and the open listing supply. Both of these key metrics point to continued easing since the median selling price hit an inflection point in February, after trending lower ever since. The June data confirms this trend.