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Inflation: How Will it Impact NYC Real Estate Investments?

Posted by Melvin Monachan | Jun 26, 2022 | 0 Comments

At first glance, it would appear that all is well with the real estate market in NYC. Investors have experienced record sales over the last several months, and a recent MPA article notes more than $300 billion in real estate sales across the nation in the last quarter of 2021. The article, citing an industry report, attributes this growth to high demand and available capital resulting from a restored job market and growing GDP.

However, investors remain cautious as commercial real estate experts temper excitement with warnings of inflation. In the first quarter of 2022, inflation increased to 8.5% from 7%. Inflation at this level hasn't been seen in nearly half a century. Also rising are the federal interest rates, which increased from 3.4% to 4.73% in the first quarter of this year.

Is Inflation Outpacing Real Estate Market Growth?

Profit expectations should be moderated, according to experts. Although inventory is low, investors can't discount the increased cost of construction, the rising federal interest rates, or inflation.

Typically, real estate is a good hedge against inflation. That said, when inflation drives up interest rates and construction costs, the long-term profitability of the investment suffers. Lenders know this, and they may soon reign in their lending practices, especially for middle-class buyers. The real estate frenzy we've experienced over the last year may be cooling as sellers decide to hold onto their current assets under the anticipation of at least a few more federal interest rate hikes this year alone.

Call a New York City Real Estate Lawyer Today

NYC real estate has always been wrought with booms and busts, and the coming months and years will be no different. If you need legal help concerning your real estate investment strategies, call an experienced NY real estate lawyer today. The knowledgeable team at the office of Melvin Monachan, Attorney at Law, can help you manage your real estate portfolio or navigate default issues. If you'd like to learn how we can help you, call (347) 389-1682, or contact us online today.

About the Author

Melvin Monachan

Melvin Monachan is the founder of The Law Office of Melvin Monachan, PLLC, a full service, real estate law firm representing individuals, investors and corporate entities in all aspects of real estate law. On the transactional side, Melvin represents purchasers and...


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