A man enters a building with rental apartments available on August 19, 2020 in New York City.
Eduardo MunozAlvarez | SEE press Corbis News | Getty Images
Sales contracts in Manhattan soared 73% in February and brokers say days of big price cuts and deals in the city could end.
According to a report by Douglas Elliman and Miller Samuel, there were more than 1,110 sales contracts signed in February, surpassing 642 in 2019 and marking the third consecutive month of year-over-year gains.
After seeing historic declines in bid volume in 2020, as hundreds of thousands of people migrated from the city to the suburbs and other states, Manhattan’s real estate market is recovering faster than many middlemen and analysts expected, thank you largely to vaccine progress and price cuts.
In the first two months of 2021, a total of 2,472 contracts were 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 brokerage firm. Sales contracts in 2021 so far have exceeded $ 5 billion.
“This is a remarkable recovery from 2020 and a trend that we started to see emerge from the moment Biden was elected in November at 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 have fallen an average of 10% in Manhattan, according to Jonathan Miller, CEO of Samuel Samuel. Many apartment buildings were forced to cut prices by 20% or more and the resale of some luxury apartments in “Billionaire’s Row” in midtown Manhattan has sold for less than half of its maximum prices in 2015 .
But now, with rising demand from returning buyers in the city, price cuts and deals could end or fade soon, brokers say. The inventory of unsold apartments, which reached more than 9,400 at its peak last fall, has fallen 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” to lower prices, ”said Steven James, president and CEO of Douglas Elliman’s brokerage in New York City.
Of course, there is still a large supply of “shaded inventory” – or empty but unlisted apartments – and sellers who need to sell quickly will still have to discount, according to analysts.
Possible tax increases in New York could also prolong any recovery, along with remote work policies that allow workers to live outside the city. Many say it could still take years for Manhattan prices and deal volume to return to pre-pandemic levels.
Still, analysts and even the most bullish brokers say they are surprised at how quickly Manhattan real estate is rebounding after last year’s record decline. Brokers say buyers are a combination of three categories: those who left town and return, younger buyers who were out of the market for years and can now buy thanks to price cuts and low mortgage rates, and new buyers who sold houses on the outskirts at high prices and want to try to live in the city.
Much of the growth is being driven by the high end, with contracts signed for quotes in excess of $ 10 million. However, even one-bedroom studios and bedrooms are experiencing strong gains from younger buyers.
“The biggest narrative is migration entering Manhattan,” Miller said. “I think the youth renaissance we’re going to see in Manhattan is an important part of history.”