New York Real Estate Begins Its Recovery
By: C. J. HughesPublished: 1/5/2021Source: The New York Times
Featuring Corcoran's President and CEO Pamela Liebman and Corcoran's 4Q20 Manhattan Market Report:
As the last deals of 2020 have been tallied, the pandemic’s effect on the real-estate market has come into sharp relief.
Surprising probably no one who has watched the coronavirus claim lives, cost jobs, prompt business failures and shatter the rhythms of urban life, the year in home sales in Manhattan was predictably grim, even though there have been recent signs of improvement, according to new industry statistics.
“There has been an upward grind in slow motion that’s been occurring since last spring,” said Jonathan Miller, an appraiser and the author of a year-end report for the brokerage Douglas Elliman released Tuesday. “But Manhattan has just not kept pace with the rest of the region.”
Battered by a ban on apartment showings at the beginning of the pandemic, a shutdown of construction sites and a decrease in potential buyers as New York has lost residents, sales activity in the heart of New York plummeted last year.
There were 7,048 sales of co-ops and condos in Manhattan in 2020, versus 10,048 in 2019, representing a nearly 30 percent drop, according to Elliman, with co-op and condo sales down about equally.
But prices don’t seem to have collapsed to the same extent, with the median of $1.05 million down only slightly, by a fluctuation of four percent, since the start of the coronavirus crisis. (The average sale price, which is often skewed by high-end transactions, was practically unchanged, at $1.94 million.)
In a pattern that suggests a widening socioeconomic divide, affluent buyers continued to snap up expensive apartments, reports from several brokerages show, while entry-level buyers, who are more likely to be unemployed because of Covid-19, were practically absent.
Indeed, buyers demanded larger homes. Apartments that sold last year typically measured 1,217 square feet, up from 1,148 in 2019, according to Mr. Miller, who added that the fresh interest in home offices only partially explains the trend.
Along the same lines, the high-end bracket — homes listed for $5 million to $20 million — was the only one to enjoy an increase in values last year, and a large one, of more than 20 percent.
“Prices aren’t really rising,” Mr. Miller said. “There was just less activity at the bottom and more activity at the top.”
Though 2020 began with strong sales, Covid quickly kneecapped the market when it slammed the city in March. For about three months, brokers could not show apartments, while a ban on nonessential construction activity shelved some condo plans. And hundreds of thousands of mostly wealthy New Yorkers relocated to summer houses and suburban towns this spring.
But after a lull in coronavirus cases, and a loosening of restrictions, the market began to recover, which resulted in a surge of deals at the end of the year — a point that real-estate boosters are quick to emphasize — even if the gains were relative.
In the fourth quarter, which covers October through December, there were 1,894 deals, according to a new report from the firm Brown Harris Stevens, up from 1,556 in the previous quarter, which bucks a decline that typically happens around holiday-time in the winter.
And it’s taking less time to market apartments, with an average of 132 days in the fourth quarter, for existing co-ops and condos, according to Brown Harris Stevens, down from 153 days in the previous quarter. The time-on-market measure is still higher than this time in 2019, when apartments were selling after an average of 126 days.
Sellers in Manhattan, which brokers say is in worse shape than Brooklyn and Queens, are bearing the brunt. With the onset of the pandemic, buyers demanded discounts of about 10 percent or simply walked away from deals, said Bess Freedman, the chief executive of Brown Harris Stevens.
“People were scared. I was scared,” said Ms. Freedman, who contracted Covid herself. “But I am pleasantly surprised by how the year ended.”
And with the start of immunizations, 2021 begins amid some hope. The number of recent signed contracts, which offers a peek at the market to come, appears robust.
In December, 528 buyers committed to purchasing Manhattan co-ops, Elliman said, up from 449 contracts a year ago; there were also 323 condo contracts compared with 304 in 2019. But those purchases won’t be finalized for a few months.
While wiping out Covid will be a boon, Manhattan’s real-estate market, which hit its recent peak prices around 2015, faces other challenges. The “mansion tax” on home sales of $1 million or more was changed in mid-2019 to rise incrementally with purchase prices, up to 3.9 percent for sales of $25 million or more, and it remains a drag on sales, according to a new report from brokerage the Corcoran Group.
But “2020 ended in much the same way that it began,” wrote Pamela Liebman, Corcoran’s president, in the report, “with the Manhattan market exhibiting signs of stabilization and resilience.”
Copyright © 2021 The New York Times Company. Reprinted with Permission. C.J. Hughes/The New York Times.