Average rental prices in the three boroughs of Manhattan, Brooklyn and Queens have reached a new all-time high. In fact, the chart below shows that while most markets are already falling sharply, New York City's trading volume remains close to its highs. Of course, just because markets have moved lower doesn't mean that New York City real estate will follow a tight pace. Rather, the downward movement across the board paints a picture of buyer and seller sentiment.
Falling asset prices tend to hold buyers back and slow down. A slower market means less competition for buyers, leading to wider margins between supply and demand. Wider spreads indicate that lack of inventory is no longer the asset it was six months ago. Instead, sellers must compete on price, or else they risk staying in the market longer than expected, or even removing their listings.