Continued Record Sales Volume
The Manhattan residential real estate market has proven its resiliency with record sales in many areas of the market. With over 1,350 contracts signed last month, last October was Manhattan’s strongest on record, beating out the two strongest sales years, 2013 and 2007, by 4% and 19% respectively. Thanks to October’s strong performance, the Manhattan market is on track to achieve its strongest year ever based on the number of contracts signed.
Areas of strength in the market
A few segments of the market are responsible for the huge growth in sales:
- This past October was the best since 2007 for new developments, with over 200 sales.
- The luxury market over $5M had a record month in October with sales hitting their second-highest level ever at 125 contracts, 71% over September 2021 and 191% over October 2020.
These numbers help account for what was a fantastic month contributing to a record-breaking year. Lower prices, low (though rising) interest rates, and high consumer confidence continue to fuel the market. New York City real estate is still undergoing a rebound, which has been driven by New Yorkers trading up for larger apartments, suburban buyers moving back in, and others looking to capitalize on the moment. This momentum will likely continue throughout the end of the year. Notably, the United States lifting the travel ban this past week has allowed foreign buyers to re-enter the U.S. International buyers makes up between 10 – 30% of condo sales (currently it is 8%), so more buyers coming to market from overseas could provide an additional boost to sales activity.
What areas are struggling in the market
This recovery is uneven, with the lower and higher ends of the market selling better than the middle (particularly of prewar and many postwar co-op sales and older postwar condos). It is important to understand that New York is made up of a wide variety of market segments – with sales volume and prices at various levels. Each segment has a distinct story – most of those untold stories are in the middle market, between $2.5M up to $10M. Some factors that contribute to weaker sales include:
- Apartments that need work – current supply chain challenges are impacting renovation timing and costs. This negatively impacts sales activity in many markets as buyers are hesitant to take on large renovation projects right now. This fact alone has buyers looking at and purchasing renovated homes.
- Smaller units that don’t have extra space or outdoor space – when these two qualities are lacking, sales suffer. Those with the extra space or added outdoor space trade at a premium given the recent shift in buyer priorities due to the pandemic.
When does high activity translate into higher prices?
Properties are selling for more money now than they were a year ago, and if priced right, demand can drive the price over the asking price. Right now, approximately 8% of deals have bidding wars. While this figure tracks with a stable average, it is well below the height of the market in 2015 when 30% of deals resulted in multiple bids.
Overall, the high-end market is up 5-10% and the lower end down 5% year-over-year according to Jonathan Miller, real estate appraiser and market analytics expert. Following the end of the initial pandemic shutdown last year, sellers often received offers 8-10% off their asking price, while this year sellers got closer to their asking price, closer to 5% off. Inventory is also significantly down from the bloated levels early last fall and there is less redundancy in the market. Overall, Manhattan prices are only 10-15% down from peak level pricing which is encouraging, but it may take a few years to reach these former high sales prices.
The economy and future Impact on real estate sales
The economy is generally healing with jobless claims dropping. Moody’s Analytics concluded that the two infrastructure bills currently in congress will strengthen long term growth and will pay for itself. The measures will add 1.5M jobs per year, and increase GDP by nearly $3T in the next decade. The strength of all these recent numbers boosted confidence, and the S&P 500 index closed at all time high last week. The reinstatement of the SALT tax deduction is also being currently being debated and if that is restored, it will serve to further lift the entire Manhattan market.
When is a good time to list my home?
Sales were strong in non-traditional seasons this past year, during the winter and summer, due to pent-up demand from the pandemic, low interest rates, and savvy buyers taking advantage of lower prices. Historically, the real estate market is seasonal, and the fastest paced markets occur during the spring and fall. This past year was an exception leaving people to ask: Should I list now, or wait until the spring market gets into full swing?
There are a variety of factors to consider when deciding when to list your home, including how much work your apartment needs, what your personal timeline and goals are, and the increased desirability of certain features such as outdoor space, home offices, or wood-burning fireplaces. The spring market will always be the most active in general, and traditionally active markets will likely return in 2022. With that said, many apartments will sell successfully in the fall or early winter if the property has qualities buyers are looking for now – and if priced correctly. In fact, we often see a surge in the last few months of the year as some buyers make decisions before the new year or want to avoid increased buyer competition in the spring. Normally it is not advisable to list near Thanksgiving and the holidays as buyers are often distracted during that period.
It is easy to look at the record sales volume news and expect that all apartments will sell quickly and high, but this is not the case. In times where the market is behaving unevenly, it becomes even more critical for sellers to understand where their apartment fits within the current inventory on the market. If your market segment was significantly hurt by the pandemic and is currently experiencing lackluster sales activity, it is probably best to list in the spring. My team and I are happy to offer clear and reasoned advice on correct pricing valuations, timing and how to best prepare your apartment or house to achieve the highest sales price. We are always happy to help you develop the strategy that will optimize your goals.
Manhattan residential real estate is usually highly seasonal – the summer is typically the slowest season of the year. As the temperatures cool, the market heats up ushering in an active fall and winter. Last year’s challenges upended any expectation of seasonality, and the Third Quarter numbers reflect that the summer was anything but slow this year. Buyer demand in Manhattan skyrocketed during the Third Quarter, making it the market’s best summer since 2007. Sales volume from July through September totaled over $9.5B, which was Manhattan’s highest quarterly total ever! As sales surged, supply was reduced thus shortening days on market and stabilizing prices. Better value, low interest rates, upsizing, tightening supply, and high confidence has been powering Manhattan’s comeback, putting it on track to produce one of the best years ever for Manhattan real estate.
Additionally, during the Third Quarter:
- Closings increased on a quarterly and annual basis, reaching their highest level in 14 years.
- Contracts signed, the best barometer of current market conditions, remained very strong, improving annually for the fourth consecutive quarter to over 3,500 deals.At this pace, Manhattan is on track to break the 2007 record for the number of contracts signed in a single calendar year.
- There is still a high supply of inventory for sale, but the sheer velocity of deal activity has driven the number of listings down over the past year.
September: A Good Indicator of Early Fall Momentum
In September, there were 1,011 contracts signed in Manhattan, marking a record high for both condos and co-ops. Condos led the way – doubling the number signed compared to a year ago. According to Urbandigs.com, given supply and demand, leverage has remained with buyers throughout September in many markets, even with the positive statistics overall.
- Demand for luxury properties remains robust, with sales over $5M also reaching an all-time high for September with 75 contracts signed.
- In response to the very strong demand, days on market fell on a yearly basis for the ninth consecutive month to 155 days on average, only slightly above August but down 5% versus its pre-pandemic peak of 164 in January 2020.
Not all Markets are the Same
Manhattan is made up of many different sub-markets that perform very distinctly given market demand. These unique sub-markets are defined by product type (co-ops, condos, townhouse and new development), price point, and location. In addition, a building’s reputation and/or level of amenities vastly changes a home’s desirability. Two similar properties in very different buildings or locations can be valued quite differently. While certain categories sale prices have exceeded pre-pandemic levels, the market cannot be considered fully recovered as certain sub-markets continue to struggle to regain their pre-2020 value. There have been plenty of reports lately that highlight spectacularly high sales, but these reports often fail to drill down on specific sub-markets that may or may not be as ‘newsworthy’. Sellers should not react to record sales by ambitiously pricing at 2015-2016 peak levels just yet.
- Inventory is still high with 6,850 active listings recorded in the Third Quarter, 17% over the average 3Q over the last decade, albeit the lowest in the last three years and 28% down from last year’s high of nearly 10,000 listings.
- Buyer priorities have shifted and the ability to work remotely changes buyer’s views on where to live.
- If mortgage rates increase, there may be a slowdown to the fast pace of the current market. The fear of increases is in part driving the current activity.
- Supply chain shortages and costs have made new or renovated homes even more desirable, and homes that need work less desirable.
- Negotiability percentages are at their lowest levels in four years. Multiple offer scenarios have returned to various sub-markets- this is not true across all property types. The share of multiple bid scenarios in Manhattan rose to 8.3% in the Third Quarter, the highest it has been in 3 years, but still way below the 31% record set in the 3Q 2015.
- As prices improve, buyers could back off if they feel they missed the market. Historically, pricing start to increase 9 to 12 months after sales activity improves.
Seasonality or a Change in Consumer Behavior?
It is hard to know what the future holds, but many trends spurred on by the global pandemic have remained. Buyers are still upgrading to larger homes and townhouse sales are still very high. Pieds-a-terre have also become more desirable as those who have left the city for new homes in the suburbs want to return periodically for work or perhaps to enjoy the resurgence of the city. Just recently, the US lifted travel bans from most countries which will encourage foreign buyer purchases (especially in larger condos and new developments). This year may have been atypical seasonally, but it may be time to reevaluate what motivates today’s buyer.
Advice for sellers:
We continue to maintain that pricing properly and not ambitiously will yield the best possible sales price the market will bear and, in the end and if priced properly, the result could exceed expectations. Additionally, properties that need work, are perceived as dated, or do not show well could sit on the market due to the difficulty of renovating amidst current supply chain challenges. Now, more than ever, preparing your home through staging and minor repairs to make it “move in ready” is critical. If you are considering buying or selling, we would be happy to speak with you about the best strategy and timeline to meet your goals.
Advice for buyers: UrbanDigs.com, a highly respected source tracking and analyzing NYC residential real estate data in real time, contends there is still a window of opportunity right now for buyers because supply still outpaces demand. Their weekly video blog reviews the various categories where buyers are most likely to fare well and provides the background for their predictions. UrbanDigs most recent episodeRead More »
Last year was an unprecedented year in nearly every aspect. New York City endured extraordinary challenges. Leading up to the pandemic, the Manhattan residential real estate market had been showing signs of weakness since 2018. Signs of a stabilizing market appeared in the First Quarter of 2020 but the optimism was short-lived. When the city shutdown occurred in March, the stock market dropped sharply, nonessential businesses closed, New York City became an epicenter of the virus, and real estate sales activity dropped precipitously. Many left the city for several months, if not for good, and for the first time the suburban housing market far outpaced the city in sales volume and rising prices.
The difference between then and now is quite stark as the Manhattan sales market has had its best spring season in terms of sales volume than in more than 5 years! New York City has time and again proven its resiliency by overcoming great challenges.
This newsletter will provide an overview of the first half of 2021 and what we might expect to happen as we enter the fall months. The fall market typically begins slowly as people settle in after summer vacations. Children return to school and there are many holidays in September and October which contributes to the slow start. But this year could be different as traditional seasonality has been upended over the past year-and-a-half and demand has been so strong. The only possible hitch may be related to the Delta or other variant and its potential impact on city life.
For a comprehensive analysis of the first half of 2021 and how it has compared to pre-pandemic levels and what we might expect this fall, download our Fall Newsletter.Read More »
2021 has been a banner year for Upper West Side Townhouse sales and it is only August! The strong volume of townhouse sales on the Upper West Side is in keeping with the stronger market overall but also indicates that buyers feel that townhouses are now a good value and having a lot of space plus outdoor area is again very desirable. As more buyers re-entered the market the first half of the year, the combination of the lower prices, low interest rates and increased consumer confidence all came into play. As of now, there has been over 3x the number of UWS contracts this year than the same period in 2020, and nearly 5x the number of contracts during the same period in 2019. In our just released Upper West Side Townhouse Report, we researched and analyzed the townhouse market going back through 2020 and because of the artificially low sales volume in 2020 due to the pandemic, we even went back to 2019 to fully understand the market today. As a townhouse buyer or seller this newsletter will be incredibly helpful to you, even if your house is not on the Upper West Side. You will find a detailed analysis of the Manhattan townhouse market overall to date this year as well as last year and a granular snapshot of the Upper West Side.
Selling a townhouse in Manhattan is a highly sophisticated process and takes experienced brokers with an excellent track record of successful sales. As townhouse sales specialists we know what it takes to market these properties effectively, achieve high prices and handle complex deals. We would be happy to answer any questions you have about the townhouse market in Manhattan.Read More »
All the Stars are Aligned……Why Now is a Great Time to Buy in NYC
The real estate market in Manhattan over the past few years has been more favorable to buyers especially during the past pandemic year. Since January however, there has been a steady stream of good news proving New York City’s resiliency and causing many to feel that sales prices will begin to rise and could shift the leverage back to sellers. The just-released Second Quarter numbers further strengthened the overall positive reports. Manhattan had the best spring season for closed sales in six years and the strongest second quarter for contract activity since 2007. The number of Manhattan signed contracts has been climbing since last September and rose nearly sevenfold versus last spring’s “pause” from 700 to almost 5,000 contracts. As many buyers remain focused on the desire for more space, the high-end of the market performed well with increases in the sales of larger homes (3 bedrooms or more). Due to improved sales in this category, pricing statistics climbed versus last quarter, giving the $5M+ market a nice boost. But even with incredibly strong sales, inventory remains stubbornly high. As of mid-June, 7,939 units were actively listed in Manhattan, 31% more than last year, although inventory then was artificially low due to pandemic-related showing restrictions. Inventory did moderate, albeit slightly, versus 1Q 2021—the first time since 2013 that inventory fell between the first and second quarter of the year.
The combination of pent-up demand, historically low interest rates, increased negotiability and consumer confidence have boosted sales over the first half of the year. The optimism has only grown since more and more New Yorkers have been vaccinated and the city has re-opened. Those with kids know for certain that schools will be open in the fall, which is what everyone has waited for over the past year. That said, the most significant factor in the market rebound has been lower prices, but the high level of activity in the Second Quarter indicates buyers understand that window is closing.
Window of Opportunity
By all accounts, we do expect a strong fall market. The economy is improving and will likely continue to improve. While it is nearly impossible to time the real estate market, we feel there is a rare window of opportunity right now to purchase property in NYC. Inventory is still high, offering buyers leverage on homes, especially those that are un-renovated or specifically renovated that may not appeal to all buyers. Interest rates are still low and will likely rise moderately before the end of the year. There is still negotiability and reduced or non-peak prices on many homes. Not every segment of the market is active with properly priced properties flying off the shelf. There are certain locations not considered ‘prime’ or apartment categories that have continued to suffer losses without much of a recovery. New development concessions have begun to wane and will likely be eliminated as we enter the fall market. Lastly, with buyers returning from their summer away, especially in the high-end, and foreign buyers re-entering the market, competition could increase as the year progresses.
Now more than ever it is important to have an excellent, experienced broker representing you in your purchase. If you would like to discuss your goals and options this summer, we would be happy to help. Click here to contact us.
Downtown sales accounted for 31% of sales in the first quarter representing the largest market share in Manhattan and the trend continued into April as 542 of the 1,647 contracts signed across Manhattan during the month were downtown. April not only was a banner month, the nearly 2,000 contracts signed made in the strongest April on record!
In addition, Downtown closings in the first quarter rose 7% year-over-year and resale transactions increased more than 10% year-over-year. Listed inventory reached 2,187 units and for the first time in over five years, over half of all active listings Downtown were under $2M. The average days on the market rose in the first quarter to 140 days but was tied for the lowest in Manhattan with the Upper West Side.
In our new exclusive Downtown Newsletter, we discuss the entire market downtown and also we take a deep dive into 3 different areas with comprehensive sales data since the start of 2021 which includes 1) Greenwich Village and the West Village, 2) Tribeca and Soho, and 3) the Flatiron/Nomad market. We also provide a detailed analysis of the entire Manhattan real estate market with potential aspects that can negatively or positively impact the residential market in the months ahead. As always, we provide advice for both sellers and buyers right now.Read More »
January was an important month for sales and a good measure for where we might go from here. We wanted to provide you with an expanded market snapshot that delves deeper into the Manhattan condo and co-op sales in January.
This snapshot will review:
• Contracts Signed: Number of condo and co-op contracts reported signed during the month
• Active Listings: Number of active listings inventory as of the last day of the report month
• Days on Market: Average days on market for the month plus a 3-month moving average
• Average PPSF: Average price per square foot of contracts signed during the month
• Negotiability Factor: Average percent discount off last asking prices for the report month
• Contracts Signed by Price Range: Condo and co-op contracts reported signed by price bracket
• Contracts Signed by Submarket: Condo and co-op contracts reported by submarket
Each and every submarket (neighborhood, size, price point and property type) reacts differently and we are happy to answer any questions you may have about your properties particular market.Read More »
September 2020: The Luxury Market’s Rebound Continues
This September, $5M+ sales, active listings, and average price per square foot all increased compared to last month and last year.
- Sales increased. September sales rose about 70% versus last year and last month to a seven-month high of 39 deals. While the $5M+ market is regaining strength, the annual increase was exaggerated by a weak September 2019 following the July 2019 tax hike.
- The surge in active listings continued. Active listings over $5M increased by double-digits for the eighth consecutive month and reached their highest September total in at least ten years.
- Days on market, higher than last year, fell versus last month. This was the second month in a row that a monthly improvement in sales corresponded with a monthly decline in days on market.
- Pricing driven higher by penthouse sales. At $2,944, average price per square foot was 4% higher than September 2019 and 21% higher than August. Pricing was driven higher by an increase in contracts signed on penthouses featuring large outdoor spaces.
August 2020: Manhattan’s Luxury Market Holds Steady
This August, $5M+ sales were nearly level with last month, active listings rose quickly, and pricing cooled as result of fewer very high-price deals.
- Sales, while lower than last year, were nearly level with July. August saw 23 sales over $5M, a 51% annual decline. The market is still rebounding from very low levels earlier this year, so the annual decline is unsurprising. More importantly, sales fell by just one from July, suggesting the $5M+ market has stabilized for now.
- Active listings continued to climb. As seen last month, active listings, which are usually lowest in August, instead increased by 7% from last month and 11% from last August to 1,001 listings.
- Days on market remains high, but was lower than last month. With buyers returning, days on market rose by its slowest pace in six months, and decreased by 50 days on average versus July. Seven apartments signed in under 90 days, on par with last year.
- Prices moderated versus last year. At $2,431, average price per square foot fell amid a drop in the share of sales in prime locations and for units on high-floors with quality water, park or city views.
While the Upper West Side had 7 fewer contacts signed under $4M than the previous week, the Upper East Side had 5 more contracts signed. These last few weeks of summer will be likely less active simply because of the time of the year, however since there is more clarity around schools, we could be pleasantly surprised. Markets typically improve with varying degrees of certainty. There were 3 contracts signed OVER $4M on the Upper East & West Sides, not unexpected for this time of year. 941 Park-2/3C asking $6.95M, 200 WEA-12G asking $4.495M & 25 CPW-16I asking $4.37M. Keep an eye out for our fall market preview in the first weeks of September as we analyze market conditions & get closer to more accurate pricing w/ late summer – early fall closings.
We are happy to give you more detailed information on this data. Please reach out to Deanna at DEK@corcoran.comRead More »