StreetEasy released a report last week revealing exacerbated challenges in affording homes throughout Queens and the rest of the city. However, the report predicts a restabilization of the market is on its way.
According to StreetEasy economists, Queens buyers need 44.7% more income than they did this time last year to afford a median-priced home. This could have contributed to an 11.2% drop in contracts signed from June to July, which is steeper than the usual late summer slowdown, according to StreetEasy data.
Economist Kenny Lee from StreetEasy revealed a silver lining for potential homebuyers. The median asking price in Queens fell to $639K in July, down from $648K in June, making it the first month-over-month price drop in 2022.
Lee said this data, however, does not signal a market crash as one would expect. Instead, he said this is what rebalancing could look like as the borough recovers from the COVID-19 pandemic and inflation.
“We do not think the slowdown this summer is a harbinger of a crash,” the StreetEasy report said. “Our data on unique buyer inquiries per listing indicates buyer demand is shifting to more affordable homes below $500K, as higher financing costs have pushed many would-be buyers to this segment of the market.”
As higher mortgage rates spike, buyer interest has dropped significantly, according to StreetEasy. Recent increases in listing prices were cut, indicating this dip in demand. In July, 11.9% of New York City sellers lowered their asking prices, slightly below the 14.8% in June but higher than the 10.2% in July 2021, as researched by StreetEasy.
“These price cuts indicate softening seller confidence as demand slows,” according to the report.
In addition, as rent becomes more expensive, renters with bigger pockets are shifting toward buying. There was no sign of rent decreases in July, according to StreetEasy. The median asking rent in New York City rose 34% year-over-year to $3,582 in July.
Queens saw a new all-time high in rents, with a 18% increase for a one-bedroom and a 17% increase for two-bedrooms, according to Zumper data.