How will inflation affect New York real estate? Experts share 5 factors to consider

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New York’s vibrant real estate market continues to show no signs of slowing down as decrease in supply and increase in demand led to a steady stream of deals during the summer months. The frantic pace has driven prices up steadily, especially in Manhattan’s most exclusive neighborhoods. But with the rise in consumer prices, the last Consumer price index Consumer prices rose 5.4% in July from the same period last year – some are wondering what impact the uncertainty in the national economy will have on the New York real estate market.

To better understand, the members Manhattan’s leading brokerage Warburg Realty shared their views on the current market dynamics and the potential impact of inflation on New York real estate. Buyers and sellers must consider five factors, from rising prices to renewed international interest.

1. Fleeting Opportunities for Sub-Market Offers

Earlier this year, I worked with a customer who was willing to make a $ 800,000 purchase on the Upper West Side. She submitted offer after offer, hoping to get a good deal, and instead continued to receive re-rolls of offers with a full offer – a sign that the market was picking up steam. Fast forward to the present moment: properties like the ones she reviewed earlier this year are completely out of her budget, and she feels like she missed her chance to buy in the city. – Becky Danchik

Currently, shoppers are unhappy with the bidding war and the real lack of good products available. Sellers cash out at higher prices, even higher than the asking price. But among buyers there is a feeling that the next purchase is very difficult and very expensive to find. Yes, shoppers are now realizing that they’ve waited too long and missed out on a great opportunity to shrink or enlarge or make a purchase as their first shopper. With prices rising, buyers who are highly motivated to buy participate in the game and move towards closing the deal. – Ted Karagannis

2. International interest drives market growth

I feel like there is euphoria about New York’s slow return. We are seeing an increase in the number of international buyers returning to New York in search of commercial and investment properties. In my opinion, the inflation numbers and warnings we receive are temporary and related to supply shortages during COVID, such as used cars, rentals and lumber supply. New York, in comparison with other major cities in the world, actually has quite reasonable prices. – Paris Afhami

3. New York real estate remains a good investment.

Rentals and house prices are going up, and I think this has caught a lot of people off guard. This is Econ 101; high demand and lack of supply affect the price. There are few good apartments (for rent or for sale), so prices have gone up. I think and hope that we will see prices and stocks decline and rise, respectively. I think the price has reached or is close to the Covid loss percentage. On inflation: a loaf of bread and a gallon of gasoline still cost about four dollars. The stock market is doing well. When it comes to real estate, New York and the price category I serve tend to be more isolated. However, taxes and rising spending on early childhood education are a concern. – Chris Totaro

4. Prices have gone up, but not all bad.

I think both buyers and sellers are leaning towards positive sentiment. Some buyers definitely feel like they’ve missed their chance. But in reality, they missed the opportunity to buy at a very much discounted price. Buyers can still find a bargain as prices have returned to mid-2019 levels. Prices began to recover shortly before the pandemic, so a deal could still be closed. In terms of inflation, I have not heard buyers mention that rising prices will affect their buying decisions. If anything, inflation will affect the market below $ 1 million, where people tend to fund more. – Bill Kovalchuk

In general, the sentiment of both buyers and sellers is very positive. I’m sure there are buyers who didn’t pull the trigger during covid when prices were lower. Yes, they must be upset that they missed this great opportunity. However, buyers who really want to buy will be open to price increases. Prices will only go up, so now is always the right time. But I don’t think inflation will affect the New York housing market. The market is very strong right now, and as we move forward, it will only get stronger. – Andrea Warshaw-Wernick

5. Some may need to reconsider their spending habits.

Inflation has multiple effects on real estate, but the most obvious are the cost of capital (interest rates) and the decline in disposable income as commodities rise in price. Add to this credit card and other debts (auto loans, student loans, etc.) – they can affect discretionary income and savings rates. The bottom line is that buyers need to be more demanding and attentive to their budgets, and sellers need to be willing to negotiate or cut prices. – Rowena Dasgupta


Warburg Realty is an exclusive member of Forbes Global Properties, a consumer marketplace and a membership network of elite brokerages selling the world’s most luxurious homes.

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