East Coast vs. West Coast
New York or California? The choice is truly apples and oranges. Two facts: New York City is older, with a longer urban history than Cali. And as a result, NYC and nearby areas are much more densely populated than most of California. The rest is mostly a subjective matter of preference. Loyal New Yorkers say that Southern California (San Francisco, not so much) has the best year-round weather, and NYC has everything else.
And, it costs more to live in New York City than in Los Angeles, for instance. This has to do primarily with the fact that there literally is less available floor space in Gotham. Initially, the numbers can be deceiving. For example, if you’re looking to lease a 1-bedroom on either coast, the monthly tab may look about the same ($3K-ish). The difference, however, is that the Los Angeles 1 BD - 1 BA is probably bigger: Manhattan rentals are more along the lines of those found in Tokyo, just enough space for a futon and maybe a crouton.
Buying a home on either coast can be, in surfer-speak, gnarly in terms of price. As 2022 comes to a close, Realty Biz News reports that in February, 2022, New York home prices jumped 12.6 per cent over last year’s figures, the median price for a home in Fun City and environs landing somewhere between $755,000 to $805,000, and $1.1 million in Manhattan proper (PropertyShark). And, although housing inventory may be growing nationally, this is not the case in New York City. The same report reveals that at the end of 2021, the number of homes actively listed for sale dropped by approximately 180,000 -- 27 per cent -- over 2020’s numbers. PropertyShark reports that the number of transactions dropped 18 percent compared to the same month last year. Even more challenging for potential buyers in the area: New York mortgages spiked from 3.45 percent to 3.76 percent between January 2022 and February 2022 alone.
Are things any sunnier in the west? Trend shifts beginning in June, 2022 lead many observers to conclude that Cali’s housing market is finally cooling, mirroring sharp declines in consumer spending power. Home sales in all major California regions declined from a year ago, with four of the Big Five (San Francisco Bay area, Central coast, Southern California. Central Valley, and Far North) dropping more than 25 percent on a year-over-year basis. Rising interest rates have slowed sales, since many potential buyers in every niche of the housing market seem increasingly unwilling to invest. In November, 2022, Norada Real Estate revealed that home sales in California have fallen for 15 straight months year over year. And Q4 was the second time in three consecutive months that sales fell more than 30 percent from the previous year. Hardest-hit: the smaller, more modest homes typically purchased by first-time buyers, as well as empty-nesters and downsizing retirees. Sales of California homes in the sub-$300,000 price category, well below the state’s median price of $834,400 (or $863,790 on the low end, according to Element Homes), fell nearly 37 percent. This is a telling sign, since the trend of remote working in theory would enhance demand for affordable spaces. Also, even the showiest of McMansions are not immune: million-dollar house sales show a current decline of nearly 26 percent, according to Norada. Purchase apps are down by 41 per cent, falling for 6 consecutive weeks between Q3 and Q4. And now for the bad news: refi apps down a stunning 85 percent over last year.
As for price, home prices rose in all major California regions except the San Francisco Bay area, where a typical ask for an existing single-family home averages $1,256,500. Housing affordability in the Golden State is expected to drop to 23 percent in 2023, meaning that 23 percent of interested buyers won’t take the leap of faith due to sticker-shock. Norada’s November 9, 2022 report states “…mortgage applications have fallen for 6 weeks.” Although demand is declining in response, the overall lack of listings keeps California inventory tight.
California Association of Realtors (CAR) recently polled its members on expectations for Q4-2022 - Q1 2023, and reports that less than 5 percent of the poll participants now think that sales will increase any time soon. Of the same polling group, a declining percentage -- 18.2% down from 30% -- now believes that listings will increase in the foreseeable future. CAR’s “2023 California Housing Market Forecast” predicts a drop in median home price to $758,600, a decline of close to 9 percent from the current range. The CAR Forecast also predicts a decline of 7.2 percent in the sales of existing single-family homes in California.
The take-away: for the best quality of life possible, you really need to be bicoastal, with plenty of frequent flyer miles to leaf-peep in New England, take in Manhattan’s holiday department store windows, and squeeze in a quick skate at the 30 Rock rink, then wing west to your beachfront retreat in time to pop the cork on some New Year’s bubbly with Babs and Jim. To help you get there, your realtors will play an ever-more important role as trusted advisors in a buying and selling process which will only become more challenging as the snow flies.