A man enters a building with rental apartments available on August 19, 2020 in New York City.
Eduardo MunozAlvarez | VIEW press | Corbis News | Getty Images
Sales contracts in Manhattan soared 73% in February, and brokers say the days of big price cuts and deals in the city may be ending.
There were more than 1,110 sales contracts signed in February, against 642 in 2019 and marking the third consecutive month of year-on-year earnings, according to a report by Douglas Elliman and Miller Samuel.
After seeing historic declines in turnover in 2020, as hundreds of thousands of people migrated from the city to the suburbs and other states, the Manhattan real estate market is recovering faster than many brokers and analysts expected, largely thanks to vaccine progress and price cuts.
The first two months of 2021 saw a total of 2,472 contracts signed – the highest levels since the peak of the Manhattan market in 2015, according to Garrett Derderian, director of market intelligence at Serhant, a real estate broker. Sales contracts in 2021 have so far exceeded $ 5 billion.
“This is a notable recovery from 2020 and a trend that we are starting to see from the moment Biden was elected in November until the announcement of the first viable vaccines for Covid,” said Derderian.
Brokers and analysts say much of the activity was driven by lower sales prices, which fell by an average of about 10% in Manhattan, according to Jonathan Miller, CEO of Miller Samuel. Many condominium buildings have been forced to cut prices by 20% or more and the resale of some luxury apartments on the “Billionaire Line” in midtown Manhattan are selling for less than half of their peak prices in 2015.
But now, with increasing demand from buyers returning to the city, price cuts and deals may be ending or disappearing soon, brokers say. The stock of unsold apartments, which had inflated to more than 9,400 at its peak last fall, decreased 20% to about 7,500, which is close to the historical average, according to Miller.
“It looks like it will be a short window” for price cuts, said Steven James, president and CEO of brokerage firm Douglas Elliman in New York.
Of course, there is still a large supply of “parallel stock” – or empty, but unlisted apartments – and sellers who need to sell quickly will still need to give discounts, analysts say.
Potential tax increases in New York can also prolong any recovery, along with remote work policies that allow workers to live outside the city. Many say it may take years for Manhattan prices and turnover to return to pre-pandemic levels.
However, analysts and even the most optimistic brokers say they are surprised at how quickly the Manhattan real estate market is recovering after last year’s record decline. Brokers say buyers are a mix of three categories: those who have left the city and are returning, younger buyers who have been out of the market for years and are now able to buy thanks to price cuts and low mortgage rates and new buyers who they have sold their homes in the suburbs at high prices and want to try to live in the city.
Much of the growth is being driven by the high-end segment, with contracts signed for listings above $ 10 million quadrupling. However, even studio and one-bedroom apartments are making big gains with younger buyers.
“The biggest narrative is the inbound migration to Manhattan,” said Miller. “I think the revival of youth that we are going to see in Manhattan is a big part of the story.”