A man enters a building with rental apartments on August 19, 2020 in New York.
Eduardo MunozAlvarez | BUSY printing | Corbis News | Getty Images
Sales contracts in Manhattan rose 73% in February, and brokers say the days of major price cuts and deals in the city could end.
More than 1,110 sales contracts were signed in February, up from 642 in 2019, marking the third consecutive month of year-on-year gains, according to a report by Douglas Elliman and Miller Samuel.
After seeing a historic decline in transaction volume in 2020 as hundreds of thousands of people migrated from the city to the suburbs and other states, Manhattan’s real estate market bounced back faster than many brokers and analysts expected, largely thanks to vaccine advances and price reductions .
In the first two months of 2021, a total of 2,472 contracts were signed – according to Garrett Derderian, director of market intelligence for Serhant, a brokerage firm Serhant, the highest levels since the market in Manhattan in 2015. So far, sales in 2021 to $ 5 billion rose.
“This is a remarkable recovery from 2020, and a trend we’re starting to see, from Biden’s election in November to the announcement of the first viable vaccines for Covid,” Derderian said.
Brokers and analysts say much of the activity was driven by lower selling prices, which according to Manhattan Miller CEO Miller Samuel fell by about 10% in Manhattan. Many apartment buildings were forced to cut prices by 20% or more, and sales of a few luxury apartments on ‘Billionaire’s Row’ in downtown Manhattan sold in 2015 at less than half their peak prices.
But now, with the increasing demand from buyers returning to the city, price reductions and deals could soon end or fade, realtors say. The stock of unsold apartments, which rose to more than 9,400 at the peak of last fall, has shrunk by 20% to about 7,500, which is close to the historical average, according to Miller.
“It looks like it’s going to be a short window” for price cuts, says Steven James, president and CEO of Douglas Elliman’s New York City brokerage.
Of course, there is still a huge supply of ‘shadow stock’ – or flats that are empty but unlisted – and sellers who have to sell fast will still have to discount, analysts say.
Potential tax increases in New York could also extend any recovery, along with remote work policies that allow workers to live outside the city. Many say it could take years for Manhattan prices and turnover to return to pre-pandemic levels.
Yet analysts and even the strongest brokers say they are surprised at how quickly Manhattan’s real estate is bouncing back after last year’s record decline. Brokers say the buyers are a mixture of three categories: those who leave the city and return, younger buyers who have not been in the market for years and can now buy thanks to price reductions and low mortgage rates, and new buyers who move their homes into the suburbs for high prices and want to live in the city.
Much of the growth is driven by the best, with contracts signed for quadruple listings of more than $ 10 million. Even studio apartments and one-bedroom apartments find younger buyers strong profits.
“The bigger story is the incoming migration to Manhattan,” Miller said. “I think the youth renaissance we’re going to see in Manhattan is a big part of the story.”