According to Brown Harris Stevens Chief Economist Greg Heym, he says “the stock market volatility we already had this year has now taken steroids. It will also keep the bond market volatile, so expect some serious movement in mortgage rates.” As you know, 30-year rates have been on the rise, but fell last week in light of the banking news. Today, they appear to be back up. Some potential buyers locked in the lower rates last week, but again nothing is stagnant. We can expect to continue seeing this increased volatility, so it’s difficult to know what impact this will have on the real estate market.

In his most recent news update, Heym said he was expecting a 50-basis point rate hike by the Federal Reserve before the bank crisis. However today the Fed announced that they only raised rates by 25 basis points, given the recent bank turmoil. Fed Chair Jerome Powell assured the public they will be doing everything they can to “keep the banking system safe”, while trying to curb inflation.

As I mentioned last week, buyers shouldn’t expect discounts this Spring season—at least not in New York City—despite what we’re seeing in other places like Sweden where high interest rates have led to a 15 percent drop in home prices. Each market is different and we shouldn’t expect a sudden shift because of the bank turmoil. At the risk of sounding like a broken record, we’re all still in “wait and see” mode. These next few quarters will be telling, and we should have a better picture of first quarter activity, when the 2023 Q1 Manhattan Market Report is released in a couple of weeks.