A man enters a building of rental apartments available on August 19, 2020 in New York City.
Eduardo Munoz Alvarez | VIEW press | Corbis News | Getty Images
Sales contracts in Manhattan are up 73% in February, and brokers say the days of major price cuts and deals in the city may be coming to an end.
More than 1,110 sales contracts were signed in February, up from 642 in 2019, 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 deal 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 recovering faster than many real estate agents and analysts expected, largely thanks to vaccine advances and price cuts .
In the first two months of 2021, a total of 2,472 contracts were signed – the highest level since the Manhattan market spike in 2015, according to Garrett Derderian, director of market intelligence at Serhant, a real estate brokerage firm. Sales contracts in 2021 have so far exceeded $ 5 billion.
“This is a remarkable recovery from 2020, and a trend that we began to see from when Biden was chosen in November to the announcement of the first viable vaccines for Covid,” said Derderian.
Real estate agents and analysts say much of the activity was driven by lower sales prices, which are down about 10% on average in Manhattan, according to Jonathan Miller, CEO of Miller Samuel. Many apartment buildings were forced to drop prices by 20% or more and the resale of some luxury apartments on “Billionaire’s Row” in downtown Manhattan were sold at less than half their peak prices in 2015.
But now, with rising demand from buyers returning to the city, price cuts and deals could soon end or fade, real estate agents say. The stock of unsold apartments, which had risen to more than 9,400 at its peak last fall, has shrunk 20% to around 7,500, which is close to the historical average, according to Miller.
“Looks like it will be a short period” for price cuts, said Steven James, president and chief executive officer of Douglas Elliman’s New York City brokerage.
Of course, there is still a large supply of “shadow inventory” – or apartments that are empty but unlisted – and sellers who need to sell quickly will still need to get a discount, analysts say.
Potential tax increases in New York can also prolong any recovery, along with a remote working policy that allows workers to live out of town. Many say it could be years before prices and transaction volume in Manhattan return to pre-pandemic levels.
Still, analysts and even the most optimistic real estate agents say they are amazed at how quickly Manhattan real estate is returning after last year’s record decline. Realtors say the buyers are a mix of three categories: those who have left the city and are returning, younger buyers who have been priced out of the market for years and are now able to buy thanks to price cuts and low mortgage rates, and new buyers who buy their suburban homes for sale. high prices and want to try to live in the city.
Much of the growth is driven by the high-end, with contracts signed for more than $ 10 million, quadrupled. But even studio apartments and single rooms are seeing strong benefits from younger buyers.
“The bigger story is inbound migration to Manhattan,” said Miller. “I think the youth renaissance that we’re going to see in Manhattan is a big part of the story.”