End Of Year Market Recap- 2022

Economists are often pressed to condense complex market conditions into a few sentences. While this is indeed a challenge, it is important to understand the nuances of the real estate economy. It is far from a uniform market, with different geographies, price points, and use cases that all interact in unique ways. What’s more, the ramifications of any given action are rarely limited to the initial outcome; secondary and tertiary effects can have an even greater impact. To see this in action, one need look no further than the current housing boom stemming from the COVID lockdowns.

After an encouraging first half of the year, a slump occurred in early autumn. The NYSE sank to its least elevated point in 2022 and the 30-year mortgage rate went from 3.16% to 7.2% in just 10 months, leading to a 55% boost in the median homeowner’s monthly expenditure. Currently, inflation is persistent at an annual rate of 7.1%, substantially above the 2% target. Looking ahead, the Federal Reserve is likely to display a more reserved approach, striving to reduce brusque fluctuations to let Americans take a breather and monetary regulators to study the succeeding effects of their previously-made decisions.

Jonathan Davis, from the renowned Davis Team at Nest Seekers, gives an extensive overview of the real estate market in New York City, the Hamptons, and South Florida for the year 2022.

Jon Davis of the Davis Team at Nest Seekers International

New York:

“The luxury property market in New York City was an eclectic mix in the year 2022. Closings were relatively strong, with a near-record number of transactions taking place. Condominium sales increased 18.5% year-over-year and 34.1% relative to the 2013-2021 average. Prices decreased slightly, with the median sinking 2% to $14.4 million, and the average decreasing 3% to $18.2 million. There was a 14.3% bump in cooperative deals, but this is still 9.1% below the 2013-2021 average. Median and average prices for this type of housing dipped 15% and 10% respectively. One of these cooperative sales even set the record for the highest priced transaction of the year – at $101 million for a unit in the Upper East Side. Despite robust sales, the best indication of market conditions was contract activity. In 2022, there was a marked decrease in the number of contracts reported; there were 188, down 42% from the year prior. The decrease was not uniform across the year; in the first half, 134 contracts were reported, representing a 15% drop from the year prior. Yet in the second half, there was a significant downturn, with just 54 contracts, a 68% decrease from the same period in 2021 and a 60% decrease from the first half of the year. Factors such as jittery financial markets and worries of an impending recession factored into buyers’ hesitancy, though mortgage rates were not the primary cause”.

Hamptons:

“All 12 markets monitored experienced declines in the Number of Home Sales and Total Home Sales Volume in 2022 compared to 2021. However, 11 of the 12 markets saw increases in the Median Home Sales Price. Notably, Southampton Village, Bridgehampton, and East Hampton Village all had Median Home Sales Prices over $4,000,000 with the only drop in Median Home Sales Price being Sag Harbor Village which decreased from $2,400,000 in 2021 to $2,100,000 in 2022. Southampton Village boasted an impressive 49% increase in Median Home Sales Price from $3,100,000 in 2021 to $4,608,073 in 2022 and East Hampton Village held the highest Median Home Sales Price at $4,950,000, a 23.44% improvement from Year End 2021. Additionally, Southampton Village closed 11 home sales over $20M+, the most of any East End market. The Total Home Sales Volume across ALL Hampton Markets Combined decreased -29.1% in 2022 compared to that of a record breaking 2021. This was despite Bridgehampton, which includes Water Mill and Sagaponack, logging the highest amount of money changing hands at $1,496,879,732. Interestingly, the Median Home Sales Price still rose by 8.8%”.

South Florida:

“In 2022, the South Florida super-prime market experienced a noteworthy year, even though sales and newly reported contracts fell short of the previous year. Specifically, Palm Beach had 71 home sales, which, although 33.6% lower than the 107 recorded in 2021, was still the second highest number ever and saw an increase of 97% from the 2013-2021 average. Removing 2021 from the data, the number of sales was even higher, up 163% from the average since 2013. Nevertheless, the median price was a remarkable $18.45 million, surpassing the $18.4 million record set in 2018. Additionally, the average price of $24.9 million was very near the record $25.3 million set in 2021, while the average price-per-square-foot attained the highest value ever recorded at $3,662. In Miami-Miami Beach, the 2021 number of 171 finalized sales was 33.7% lower than the 2021 levels but still represented the second highest number of sales for the region ever. Compared to the 2013-2021 average, this number is a 104% increase and when excluding 2021, it is 176% more. Prices both in terms of median and average property values set records, reaching $15.3 million and $18.1 million, respectively; additionally, the average price-per-square- foot rose to a record $2,849. Regarding newly reported contracts, Palm Beach and greater Miami had dips in activity at 23% and 51%, respectively. Similar to New York, the declines were mainly seen in the back half of the year. From January – June, contracts in Palm Beach decreased only by 6%, but then dropped by 28% from July – December. In comparison, contracts in Miami went down 27% in the first half of the year, and a staggering 60% in the second half. This downturn is partially due to the restricted supply of homes, but economic instability and the prospect of prices reaching the peak of a cycle have certainly kept buyers from entering the market. Nevertheless, many companies are still relocating to the area, and its financial benefits could lead to fairly solid pricing next year”.