A man enters a building with apartments for rent available on August 19, 2020 in New York.
Eduardo MunozAlvarez | SEE press | Corbis News | Getty Images
Manhattan sales rose 73 percent in February, and brokers say the days of big price cuts and transactions in the city could end.
There were more than 1,110 sales contracts signed in February, up from 642 in 2019 and marking the third consecutive month of year-over-year gains, according to a report by Douglas Elliman and Miller Samuel.
After seeing historic declines in transaction volume in 2020, as hundreds of thousands of people migrated from the city to the suburbs and other states, the Manhattan real estate market is returning faster than many brokers and analysts expected, thanks to great progress in vaccine and price reductions.
In the first two months of 2021, a total of 2,472 contracts were signed – the highest levels at the top of the Manhattan market in 2015, according to Garrett Derderian, director of market intelligence for Serhant, a real estate brokerage firm. Sales contracts in 2021 have so far reached $ 5 billion.
“This is a remarkable recovery from 2020 and a trend that we have begun to see since Biden was elected in November at the announcement of the first viable vaccines for Covid,” Derderian said.
Brokers and analysts say much of the business was driven by lower selling prices, which fell an average of about 10 percent in Manhattan, according to Jonathan Miller, CEO Miller Miller. Many apartment buildings have had to cut prices by 20% or more, and resale of luxury apartments on downtown Manhattan’s “Billionaire’s Row” sold for less than half of their maximum prices in 2015.
But now, with growing demand from returning buyers, price reductions and offers could end or disappear soon, brokers say. The inventory of unsold apartments, which had peaked at more than 9,400 last fall, has shrunk by 20% to about 7,500, which is close to the historical average, according to Miller.
“It looks like there will be a short window” to lower prices, said Steven James, president and CEO of brokerage Douglas Elliman of New York.
Of course, there is still a large amount of “umbrella inventory” – or empty but unlisted apartments – and sellers who need to sell quickly will still have to cut back, analysts say.
Potential tax increases in New York could also prolong any recovery, along with distance employment policies that allow workers to live outside the city. Many say it could take years for Manhattan prices and transaction volume to return to pre-pandemic levels.
However, analysts and even the strongest brokers say they are surprised at how quickly Manhattan real estate returns after last year’s record decline. Brokers say buyers are a mix of three categories: those who have left town and are returning, younger buyers who have been at market prices for years and can now buy due to price reductions and low mortgage rates and new buyers. who have sold houses in the suburbs at high prices and want to try to live in the city.
Much of the growth is driven by high-end, with contracts signed for listings of over four million dollars. However, even studio and one-bedroom apartments are making strong gains from younger buyers.
“The biggest narrative is migrating to Manhattan,” Miller said. “I think the rebirth of young people we’re going to see in Manhattan is a big part of the story.”