A man enters a rented apartment building in New York City on August 19, 2020.
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Contracts for the sale of residential real estate in Manhattan soared by 73% in February, and brokers said the days of substantial price cuts and transactions may be over.
According to a report by Douglas Elliman and Miller Samuel, 1
After seeing the historic decline in transaction volume in 2020, with thousands of people migrating from the city to the suburbs and other states, the Manhattan real estate market rebounded faster than many brokers and analysts expected. This is largely due to the progress and price reduction of the Covid vaccine.
Garrett Derderian, director of market intelligence at real estate brokerage Serhant, said that a total of 2,472 contracts were signed in the first two months of 2021, the highest level since the Manhattan market peaked in 2015. So far, 2021 sales contracts have exceeded 5 billion U.S. dollars.
“This is a good recovery since 2020, and we are starting to see a trend that emerged from the time when Biden was elected as the first viable vaccine for Covid in November,” Derderian said.
Brokers and analysts say that most of the activity is driven by lower sales prices. According to Miller Samuel’s chief executive Jonathan Miller, sales prices in Manhattan have fallen by about 10% on average. Many apartment buildings have been forced to lower their prices by 20% or more, and the resale prices of some luxury apartments on “Billionaire Street” in Midtown Manhattan have been less than half of their 2015 peak prices.
The broker said, but now, as the demand for buyers to return to the city continues to increase, price cuts and transactions may soon end or disappear. According to Miller’s data, the number of unsold apartments surged to more than 9,400 last fall, but it shrank by 20% to around 7,500, close to the historical average.
Steven James, president and CEO of Douglas Elliman’s New York City brokerage firm, said: “It seems that the price reduction will be a short window.”
Analysts say that, of course, there is still a large amount of “shadow inventory”-or vacant but not listed apartments-sellers who need to sell quickly still need a discount.
New York’s potential tax increases and remote work policies that allow workers to live outside the city may also extend the time for economic recovery. Many people say that it will take years for prices and transaction volumes in Manhattan to return to pre-pandemic levels.
However, analysts and even the most bullish brokers said they were surprised that Manhattan real estate rebounded so quickly after last year’s record decline. The broker said that buyers are a mixture of three types of people: those who have left the city and return, young buyers, who have been eliminated by the market for many years due to falling prices and years of mortgage interest rates, can now buy and sell Their new buyers. High-priced houses in the suburbs and want to try to live in the city.
The high-end market drove most of the growth, with more than $10 million in IPO contracts signed, which quadrupled. However, even one-bedroom apartments and one-bedroom apartments can generate strong returns from young buyers.
Miller said: “The bigger narrative is the immigration to Manhattan.” “I think the youth revival we will see in Manhattan is an important part of the story.”