Tariffs Freeze Co-op and Condo Buyers as Rents Spike

Buyers of New York City co-ops and condos are frozen on the sidelines, waiting to assess the economic fallout of President Trump's ever-evolving tariffs on imported goods. Meanwhile, with mortgage rates likely to rise, city rents remain at record high levels. For buyers and renters alike, it's a lose-lose scenario.

Multiple real estate agents, lawyers and mortgage brokers in New York say buyers are getting cold feet during one of the worst stock market downturns in recent history, The Real Deal reports. The fall in prices wiped out over $6.6 trillion in market value, according to The Wall Street Journal. That hit to their liquid assets has, in turn, led many potential buyers to back out of deals or simply hold on to rental apartments.

“A lot of clients whose closings are coming up just lost like 20 to 25% of their liquidity on paper from the time that they’ve applied for a mortgage,” says Peter Zinkovetsky, managing attorney at Avenue Law Firm. “There are definitely going to be deals which will have to get canceled or buyers that will go into default if they don’t have a mortgage contingency, because they won’t be able to get a mortgage.”

Data from UrbanDigs shows that the percentage of canceled contracts in New York spiked to over 1% after the original tariff announcement, double the average over the past three years.

Even before tariff turmoil set in, New York rents were at record highs — and are now almost certainly headed higher. Manhattan’s median rent punched in at $4,495 in March, a whisker below the record set in February and far above last year’s metric, according to a report by the appraiser Jonathan Miller for Douglas Elliman.

The price represents a nearly 10% increase from March 2024, the greatest annual jump since May 2023. In Brooklyn, the median rent hit $3,700, a 6% annual jump; in Queens, it hit $3,450, nearly 8% more than a year ago. 

For years, the story of rising rents was largely about interest rates. As the Federal Reserve hiked rates, would-be homebuyers were dissuaded by higher borrowing costs, delayed their purchase plans, and held fast to leases. The trend drove up rents. 

Now, it’s President Donald Trump’s volatile policy decisions driving the bus. 

“We’re at peak uncertainty,” Miller says. “There is no apparent plan or strategy.”

On April 9, one week after announcing his original tariffs on so-called "Liberation Day," Trump, spooked by a sell-off of treasury bonds and the possibility of a wider economic tailspin, rolled back a key piece of his tariff plan, instituting a 90-day pause on reciprocal tariffs. The outlier was China, which was hit with an even higher rate of 125%. That capitulation introduces more unknowns: How long will the pause last? Which tariffs will remain when it ends? What’s the likelihood of a recession now? What's going to happen to mortgage rates? And inflation?

Everyone has questions. But at this moment of peak uncertainty, no one has any answers.