After a strong January and February, real estate demand in New York City - particularly in Manhattan, Brooklyn, and parts of Queens - is seeing a surge as we enter the spring months.
According to Mansion Global, new signed contracts for Manhattan co-ops nearly doubled in February from the prior year, rising 87.2%; deals for condominiums in the borough rose 55.1% for the same time period. “February was better than December and January combined,” said Steven James, president and CEO of Douglas Elliman in New York City.
James cites pricing as the prime driver of the surge, noting that sellers adjusted asking prices at the end of the year to be more in line with reductions that buyers expected in the wake of the coronavirus pandemic, among other factors. “There’s more potential for deals,” says James, which has inspired purchasers to look at Manhattan when they otherwise might have been confined to less pricey markets like Westchester County or Long Island. “But,” he adds, “that window is closing” as inventory reduces and pandemic pandemonium eases. By the beginning of the third quarter, James expects that such opportunities will be few and far between.
Meanwhile, Bloomberg indicates that the New York market is also being influenced by a shift in the condo construction boom that defined the last decade. The outlet estimates that more than 15,000 luxury condo units remain unsold across 900 projects, largely in Manhattan, with a total listed value of $45 billion, according to real estate data provider Marketproof Inc.
Such a glut is being chipped away by recent interest in bulk deals, where investors offer to purchase a chunk of unsold inventory at a discount. In other instances, lenders are opting to foreclose on distressed projects, leaving pricing of unsold units at the mercy of the banks that are eager to offload them. Other developers are reducing pricing themselves in response to these trends—and are finally finding buyers as a result.
The upshot is that as new inventory reduces and prices fall in line with the market, the city will be positioned for continued robust sales activity. Garrett Derderian, director of market analysis at property guru SERHANT., explains that “Across Manhattan, Brooklyn, and Long Island City, the number of contracts signed to-date in 2021 is up 17.7% from this time last year. The New York City housing market is slowly beginning to resemble the real estate market for the country at large, which is incredibly strong with low inventory and high demand. While inventory is still relatively high in the city, is it beginning to be absorbed at a steadier pace. The increase in market activity began to emerge from the time Biden was elected in November to the announcement of the first viable vaccine for COVID-19.”
Heading into the normally robust spring real estate season bolstered by a new administration, ramped up vaccine distribution, and favorable market conditions will likely entice buyers to once again see the city as a viable and valuable place for investing in a home.