NYC Real Estate December Market Update

This December was unusually busy.  With the new tax bill taking shape, buyers weighed different factors.  On the one hand, the new cap on the deductible state and local income, as well as mortgage interest put downward pressure on the New York housing market.  On the other hand, buyers rushed to close deals to lock in the current 1mm deductible mortgage interest.  The number of closed deals in December was more than 10% higher than last December, with a market that was overall slower YoY.  In terms of market prices, December was essentially the same as November and October.  Median Sales Price stayed the same at 1.2mm, with slightly longer marketing time. 
 
What will the market look like in 2018?  The economy is strong as ever, which strengthens the buyer base who is buying to live in NYC.  The negative effects of the tax bill, along with higher interest rates, will likely deter some of the buyers on the margin.  Who will win this tug of war?  On a 750k mortgage, 0.75% higher in mortgage rates means around $300 more in monthly payment.  Lost tax savings from deductible mortgage interest as a result of the new 750k mortgage cap from the existing 1mm mortgage equals another $300 loss.  How many buyers will choose renting over buying because of this $600/month difference compared to the current picture?  I think the 1-1.5mm range buyers will feel the effects the most.  To segments higher and lower than the 1-1.5mm bucket, the benefit of long term equity building should still outweigh the higher rates and lower mortgage deduction. 
 
With uncertainty, great opportunities await.  I very much look forward to the new year!  Wish everyone a good start to 2018!