Manhattan’s residential market has seen a continued recovery since an initial slump in the early days of the pandemic. Those buyer hesitations, in line with global uncertainty, seem to have largely dissipated. More than 1,500 contracts were signed in March, the highest monthly figure in 14 years, according to Nicole Beauchamp, global real estate advisor at Engel & Volkers.
As first-quarter results started pouring in, it became apparent that New York City’s residential market recovery is becoming a reality. The first three months of 2021 closed with some 3,700 signed contracts, a 60 percent uptick year-over-year. The predominantly residential areas are seeing the greatest boosts in demand, compared with those that have a more significant commercial component. There were 757 signed contracts on the Upper East Side, 655 on the Upper West Side and 757 in Downtown, according to UrbanDigs.
“The number of closings surged 66 percent from their bottom in the third quarter of 2020, which is very encouraging. While prices have come down, the number of contracts signed to buy apartments in Manhattan hit its highest level in almost six years in the first quarter of 2021,” Bess Freedman, CEO at Brown Harris Stevens, told MultiHousing News.
What do buyers want?
There are a number of factors that led up to the overall favorable trade environment, which now enables the buyer pool to engage in investments: Low mortgage rates, confidence in vaccine rollouts, easing of restrictions, stabilization of prospective work environments and low prices, to name few.
“People have been home throughout the pandemic, for the most part, and really had a chance to evaluate what they want from their living spaces. Buyers are now taking advantage of low interest rates and prices in all housing types,” Freedman noted.
The pandemic has created new health and safety expectations, while working from home has opened up some novel spatial needs. Beauchamp has seen “lots of upsizing” from her clients, who are looking to expand in order to integrate their home offices and want more amenities, such as outdoor space and terraces.
“For the first time in a long time, Manhattan is an opportunity market. We’re seeing an uptick in first-time homebuyers, people who have rented for years and decided now is the time to build equity,” Freedman said.
Prices are generally down. The median figures for condos and co-ops registered a 4 and 4.5 percent slip, respectively, compared to the end of 2020. Smaller, one- and two-bedroom home prices fell 6 and 5 percent compared to larger units—three bedrooms and up—which registered declines of up to 16 percent.
“Even before we entered the pandemic, NYC was in the midst of a price correction. It has been a buyer’s market for quite some time, so these numbers are not surprising. In fact, the market is rebounding in a very healthy way right now,” Freedman noted.
New development unit prices averaged at $3.1 million in the first three months of 2021, down 3 percent year-over-year. By contrast, the median price rose by 8 percent, a sign that luxury prices are falling and the middle market is gaining ground, according to a report by Brown Harris Stevens. New development sales activity was highest south of 14th Street, accounting for 37.5 percent of deals.
As for resales of co-ops and condos, the average price clocked in at $1.5 million, a 6 percent drop year-over-year. The greatest declines were also registered at the high end of the market. In Downtown, south of 14th Street, an acceleration in luxury condo resales brought the median three-bedroom price up 15 percent, year-on-year.
What’s next for Manhattan?
The real estate market’s recovery is essential to the city’s overall economy. Once the retail businesses, offices and schools open, they will draw life back into the borough.
“The extraordinary results of the first quarter—as one of the strongest starts to a year for signed contracts since 2007—are encouraging, to say the least,” Beauchamp said. “I remain cautiously optimistic that this is an opportunity market, perhaps once in a generation, where the opportunity for buyers is remarkable, as well as for sellers who intend to trade out and trade up.”
According to Freedman, the market will comply with New York City’s history of boom and bust cycles: “We had extreme lulls followed by intense rebounds. I believe the same pattern will come into play again. New York City is the comeback queen.”