The city that never sleeps is... in a slumber. New York's real estate market experienced an unusually quiet summer while its global counterpart is making big moves. We see you, UAE. 

Dubai continues to take center stage, as luxury home prices have skyrocketed 225% since the pandemic lows and surged by nearly 50% this year, according to the Knight Frank Prime Global Cities Index. The Emirate's booming real estate sector has captivated the attention of onlookers worldwide, including those of us in the United States, as we take note of its remarkable growth.

On the other hand, New York took a not-so-surprising fall, with a 3.9% slump in prices for the year up until June. Properties that linger on the market for north of 120 days typically sell at close to a 10% discount. In addition to weakened prices, the real estate market experienced below-average sales activity, with current inventory levels lower than summer norms. Buyers can't buy, sellers won't sell, and as a result, everything is... stagnant. 

Here are several key factors as to why we're in this predicament:

• Mortgage rates have surged to the highest point in 22 years. The average 30-year fixed rate now sits at 7.09%. This barrier to entry is causing would-be-buyers to opt into renting.

• Investors cannot reshuffle their assets as most are in fixed long-term mortgage deals at low rates. Therefore, they are not actively buying or selling properties.

• The job market has remained resilient, giving people strong spending power. The absence of student loan payments has also allowed many to have extra cash, which has gone to paying higher rents.

• Rents continue to hit record highs, with the average rent now at $5,588, a 30% increase compared to 2019 and 9.3% YoY. Interestingly, leasing activity fell in July, indicating consumers may have reached their price limit.

Bottom Line: Until a black swan event happens or there is a consistent decline in mortgage rates, it is unlikely that we will see any significant changes in the market into 2024. That said, there is reason for some optimism this fall. Despite numerous headwinds, the hope is that a seasonal bump in inventory, in conjunction with buyers finally coming to grips with rates, will translate to an uptick in sales volume.