What were the effects of the banking crisis?
As such, she cautions against focusing solely on blaring headlines detailing isolated bank failures: “Whenever these articles are written, I think this should be stressed because the Manhattan market isn’t the same as the suburban market, it’s not the same as Florida, LA, Kansas City, etc. Let’s start off with that.” Manhattan, for one, has a higher price point than most other markets, she noted.
The impact on the real estate market? Well, that’s a different story, she added: “It’s a little early to tell how it will really affect the real estate market for buyers and sellers,” she said, noting the shakeout won’t be known in the brief span of time since the banks’ collapse.
“Last week, we had 9% more contracts signed than we had the week before. As a buyer, you’re normally fairly certain and you plan ahead at least three months ahead of time that this is the right time for you as an individual. The contacts that were signed last week – those decisions likely were not made last week. You don’t just say ‘let’s go buy a place, get approved and buy a property in a week.’ It doesn’t work like that. There’s a longer lead time.”
What’s certain is that there will be a tightening of credit after the Fed raised the interest rate again on Wednesday, this time by 25 basis points. “According to [Federal Reserve Chairman Jerome] Powell when he spoke when he raised rates, he did talk about how the banking situation will have a tightening effect for credit,” Jay said.
But Powell also was unsure what impact the banking crisis might have in the longer term: “It’s too early to say, really, whether these events have had much of an effect,” he said at a news conference following his rate hike. He did acknowledge, however, the availability of credit and standards toward securing it will be contingent on how long the baking turmoil continues.