It’s time to dive into my NYC real estate market predictions for 2022! Here’s what I think lies ahead for the year.
The shift to remote work will continue to have a tremendous impact on decisions around housing. Commute times will still matter for many folks, in particular those for whom in person work is required.
But many more people will be living where they work. This means there’s likely to be more of a focus on neighborhood character and amenities. And don’t be surprised if we see commercial development follow this trend in the form of more co-working spaces in highly residential areas.
More people working from home also means that some folks will prioritize space over location. So the suburbs outside of NYC are likely to still see a healthy influx of new residents. But that being said, many residents may choose to stay within NYC and simply go to neighborhoods where they can get more bang for their buck.
Foreign buyers are officially cleared to come back into the market. And there’s already some anecdotal signs that they’re eager to return.
Omicron has thrown a wrench in things, and it’s quite likely that their impact may be muted early on in the year. Especially if inventory is lower than expected (more on that later). But as the situation improves, we can expect to see the release of some major pent up demand come spring.
This trend was already coming to pass during 2021 and will likely be more pronounced in 2022. Even though a “pause” has been hit on office return dates, inventory has come WAY down from historic levels. For example, in December 2021, inventory was at 4,585 compared to 15,508 back in March in 2021. And with the current Omicron situation, new inventory is likely to be lower than normal for at least the first couple of months of the year. So those who are looking will have fewer choices than before.
It’s not all bad news for renters, however. More rent increases on the part of landlords may lead to more renters saying “no thanks” on renewals. And this could lead to higher inventory. But what remains to be seen is how much competition there will be as those previous tenants look for new digs of their own. (P.S. If you’re trying to decide whether or not you should move to a new rental, then you should check out this post.)
To what extent Manhattan’s comeback accelerates or slows down will be strongly impacted by how much inventory is out there. Tighter inventory coupled with solid demand could mean the resurgent market will march on. But too much inventory will put downward pressure on prices.
With Omicron still circulating widely (as of this post), I’m currently banking on the former and not the latter. I suspect some sellers may be skittish about having buyers in their homes unless they HAVE to sell. Plus buyers themselves may be more reluctant to be out and about looking unless something is truly worthwhile. So this could all translate to an inventory slowdown until the current wave passes.
But the flip side is that spring could see a huge release of inventory and pent up demand, thus heating things up once again.
The Fed has already signaled that they plan to hike interest rates at least 3 times in the coming year. This news could get some buyers off the fence to take advantage of historically low rates. Significant hikes aren’t expected. But they aren’t out of the question if inflation continues to be a serious issue. And bigger than expected increases could lead to a chilling effect on the market.
Check out this round up of links for more NYC real estate predictions from experts for 2022. And if you’re looking for a recap of NYC real estate for 2021, check out this post.
Data Geeks See End of NYC’s Housing Boom (The Real Deal)
2022 NYC Real Estate Forecast (Brick Underground)
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