The Manhattan real estate market is currently seeing an increase in deal volume and liquidity. Despite a slight deficiency in inventory, prices are rebounding and negotiability discounts are starting to come down. This suggests that the leverage may be shifting away from buyers and towards sellers in the near term.
From a macro perspective, I believe we are currently in an inflationary bear market that may last a while longer. The biggest risk is that risk assets may reprice negatively as the Fed's Terminal rate rises. "Analysts" thought this rate was set last winter, but now there's a new narrative of a "big flip" by the Fed.
It's becoming increasingly clear that the markets are adjusting their expectations for the Fed to hike rates for a longer period, resulting in bond markets and yields pushing higher again. This trend could pose a tail risk to our markets if it continues, and it's worth keeping an eye on.
We can follow narratives, but it is always important to stick to the data while making any informed decisions. Fortunately, so far, our markets have not been impacted. The Manhattan real estate market is showing signs of strengthening and tightness over the near term. Currently, there's a seasonal strength versus a rising terminal fed funds futures rate.
Sellers should take advantage of this bump in liquidity and tightness in supply trends. If you've been waiting to list, now is the time to do it. With rising risks in the credit markets and the best 4-month period for deal volume, this is the optimal time to list. Price your property correctly, and take advantage of what the market tells you. If there's no action on your listing, remember that it could be a product, market, or price problem.
Buyers, the peak leverage window may be behind you. Expect tight supply conditions and buy-side competition for well-priced units. Leverage is starting to tick away from you so expect sellers to be less likely to accept low ball offers. Liquidity is rising nicely back into the market, so expect leverage to move away from you for the near term.
Renters, you have roughly 25 calendar days left (month of March 2023) before the spring/summer rentals hit the market where historically rents rise and competition heats up. Concessions are frequently discussed in the winter market, but virtually nonexistent in the summer. Looking for a long term lease (2 years +), make offers on condo apartments or fee rentals today. Your leverage will be gone soon.
