Keeping Everything in Perspective

Picture this…

We've all been on a highway before. The speed limit is 65 MPH, but everybody else is doing 85/90 MPH. Then there's a slowdown ahead, and everyone slows down to the legal limit. But doesn't it feel like you're standing still? After doing 85/90 miles an hour, 65 feels like a snail's pace. Yet, you're still going the speed limit. That's what today's real estate market feels like.

Coming off the highs of almost 18 months going 85/90 miles an hour in a 65-mile-an-hour zone, downshifting to a normal pace feels like the end of the world! "OMG, why is everyone going so slow!" To extend the metaphor to New York City real estate activity at this particular moment, it feels like the housing market is collapsing. Maybe it even seems like doomsday is approaching. But it's not!

On the highway of New York real estate, we have a rental market that's 30 percent higher than it was pre-pandemic. Yes, interest rates have climbed 2 percent in the last three months alone, but you can still get a jumbo 30-year fixed for about 4.5 percent if you have a prior relationship with the bank. And under 5 percent if you don't. That's still historically very good.

In the Manhattan market, you have an industry that's humming along at a very acceptable 65 MPH. In the past 30 days, 1,019 units went into contract. That may be 20 percent less than the previous 30 days, but it's still pretty strong! As for new listings, 1,775 units went on the market in the last 30 days. That's 15 percent lower than the previous month… But it's summer! We always used to have slowdowns in the summer. Don't you remember?

Let's keep it in perspective. Coming down from 85/90 to 65 MPH is a slowdown, not a catastrophe. We're still doing at or over the speed limit in many of these categories. Interest rates are still within historical lows, and while there aren't 10 bids on an apartment, even if there are just 3 or 4, that's normal. That's a healthy market. That's going 65 miles an hour in a 65-mile-an-hour zone.

Now, there certainly are things along the roadside that are not normal: inflation, war, political unrest and a Wall Street correction. These are all hazards that may reduce our speed limit even more, but they won't last forever. Economies come back to normal speeds. Neighborhoods rebound. Markets go up, markets go down. Life goes on.

A lot is happening along the roadside right now, but the highway of life continues to drive on. Sometimes it speeds up, and sometimes it slows down, but if you keep your loved ones close and are nice to your fellow drivers … We will all endure :-)

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The Hoffman Team:

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