The 2022 housing market has already begun at a blistering pace, near record-low inventory and with supply delays.
Pandemic Rent “Deals” Now Past Tense
Median net-effective rent which includes any price concessions from landlords hit nearly $3,400/month in December in Manhattan, +21% y/y higher and the highest price recorded during the pre-pandemic sleepy month of December since at least 2020, according to Douglas Elliman brokerage.
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Rent hikes were particularly steep in the most expensive markets in the city. “Doorman” buildings, aka lux buildings, hit a median monthly rent of $4,207, +30% y/y. Non-doorman buildings saw a median rent increase of +11% y/y at $2,625.
According to StreetEasy, Downtown Manhattan rents jumped +40% y/y in Q4 2021 from $3,000 to $4,200. SoHo median rents skyrocketed +58% y/y to $6,002 from 3,800.
Nancy Wu, economist with StreetEasy, said, “…another rush to the rentals market in the coming months will make it more difficult and competitive than ever for New Yorkers to find a suitable, affordable apartment.”
Will January Be Most Competitive Month in Housing History?
Redfin Chief Economist Daryl Fairweather said, “The stage is now set for the most competitive January housing market in recorded history.”
The median home sale price skyrocketed +16% y/y to an all-time high of $365,000 during the week ending January 9. Homebuyer demand increased +9% as measured by the Redfin Homebuyer Demand Index and the number of homes for sale plummeted to a new low. To cap it off for homebuyers, mortgage rates increased to 3.45% during the seven days ending January 13 while overall inflation hit a 40-year high.
Fairweather continued. “Buyers are pouring into the market to claim a home before mortgage rates rise further as new listings slow to a trickle. The conditions are becoming increasingly challenging for first-time homebuyers, who will have to compete against more experienced buyers who are willing to do whatever it takes to win.”
Builders Having to Stall
Zonda, a housing-market research firm, reported that approximately 90% of homebuilders surveyed in January 2022 said they were experiencing supply disruptions. In January 2021, “only” 75% of homebuilders reported supply disruptions.
According to the Wall Street Journal, supply-chain issues are leaving newly built homes without garage doors and gutters.
A shortage of skilled tradespeople in many markets is only exacerbating home construction delays from supply-chain backlogs. Per the Bureau of Labor Statistics Producer Price Index,the average price of goods and materials used in residential construction has jumped +15% year to date while steel prices have jumped an eye-popping +134.1% y/y.
Many building products and supplies are “here” BUT they’re stuck on cargo ships waiting at ports and/or waiting to be delivered due to shortages of truck drivers and warehouse workers.
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The longer these supply chain disruptions continue, the longer it takes for products and materials to arrive at a jobsite. The consequences? Biggers hit to the home builder’s bottom line…and then typically passed along to new home buyers.
Thanks to probuilder.com, the Wall Street Journal, Redfin and MansionGlobal.