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Rising home prices and high interest rates have put a pin in real estate sales for many potential buyers. In 2022, mortgage rates grew from 3 percent to a record high of more than 7 percent, while a lack of inventory further crimped affordability. In fact, the market has gotten so expensive that U.S. incomes would have to increase by an eye-watering 55 percent for it to return to its pre-pandemic levels, according to calculations by Andy Walden, vice president of enterprise research for ICE Mortgage Technology.
“If you look at home affordability itself and what it would take to normalize the market today, it’s a 35 percent correction in price, a 4 percent decline in [mortgage] rates, or a 55 percent growth in income—some combination of those,” Walden told CNBC.
Faced with a lack of inventory and high mortgage rates, buyers are struggling to find homes they can afford.
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At the other end of the spectrum, while Manhattan’s luxury market has had its struggles amid the ongoing housing slump, the number of deals made last week suggests that it may be regaining momentum. There were 26 contracts signed for homes asking $4 million or more, per Olshan Realty’s weekly report. For comparison, the total is six more than the week prior. In total, 17 deals were made for condos, while six co-ops and three townhouses went into contract.
“The weekly total racked up $228.7 million in sales, the highest dollar value since July 10-16, when 24 contracts were signed totaling $246.95 million,” said Donna Olshan, president of Olshan Realty, in the report.
The most expensive was a duplex penthouse at 15 Hudson Yards with an asking price of $24.97 million, down from $32 million when it was first listed in 2016. The 5,211-square-foot residence features soaring 26-foot ceilings, four bedrooms, and five-and-a-half baths. The second-highest transaction was a $19.92 million unit on the 70th floor of Midtown’s Central Park Tower, the world’s tallest condominium.
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