Manhattan Sales Market Is Poised for a Revival, Just a Year After It Collapsed
First-time buyers, significant price cuts and progress on vaccines in New York City helped boost first-quarter sales.,
A year after Covid-19 cratered the Manhattan sales market, the borough is poised for a recovery, thanks to price cuts, renewed confidence in the city and a surge of first-time home buyers.
In the first quarter of this year, the number of closed sales exceeded those from the same period in 2020 for the first time in a year, with 2,457 sales, a modest increase of 2.1 percent, according to a new market report from the brokerage Douglas Elliman. Another brokerage, Brown Harris Stevens, using different sales data, said closed sales rose 6 percent.
By contrast, in the last quarter of 2020 sales were down almost 21 percent compared with the same time in 2019, said Jonathan J. Miller, the president of the appraisal firm Miller Samuel and the author of the Douglas Elliman report.
“Yes, the market is recovering,” Mr. Miller said. “But we can’t oversell and say it’s some sort of boom — it’s just dramatically better than it was a quarter or two ago.”
The median sale price of apartments fell in every size category, with the deepest discounts on the biggest and smallest units, Mr. Miller said. The price of apartments with four or more bedrooms dropped nearly 19 percent from the same period last year, to $4.96 million, while studios fell 7.4 percent, to $435,000. One-bedrooms, which made up the largest share of sales, fell 4.4 percent, to $760,000.
The median sale price of co-ops fell 3.8 percent, to $780,000, while condos fell 4.7 percent, to $1.55 million.
Beyond price cuts, there are signs that sellers’ expectations are getting more realistic. Just 3 percent of sales entered bidding wars above the last asking price, the lowest share since 2009, Mr. Miller said, adding that it is a reflection of sellers pricing more accurately.
The reset in prices is attracting a broader range of buyers, many of whom were priced out before the pandemic. First-time buyers made up 41.9 percent of sales, the highest share in at least seven years, Mr. Miller said. And the share of all-cash buyers fell to 39.3 percent, a seven-year low, as more buyers took advantage of low mortgage rates.
“It would be reasonable to describe this as a youth renaissance,” he said, referring to the return of young buyers. (The average age of a first-time buyer in New York is 37, three years older than the national average, according to a 2019 survey by the listing website StreetEasy.)
Falling prices have also attracted more out-of-state buyers, especially those from California, said Leonard Steinberg, an agent with Compass. About 10 to 15 percent of Mr. Steinberg’s buyers are now out-of-towners, he said, compared with about 3 percent last year.
While a turnaround isn’t certain based on the results from just one quarter, other sales data suggest the market is revving up. There were 3,708 contracts signed in the first quarter, the most for that period since 2007, according to a report from the brokerage Corcoran.
“It’s the strongest start to the year in a long time,” said Pamela Liebman, the president and chief executive of Corcoran, noting a mix of favorable prices and growing confidence in the vaccine rollout.
Still, challenges remain. The total number of listings for sale was 7,224 in the first quarter, up 18 percent from the same time last year, Mr. Miller said. But inventory has decreased steadily from a peak of more than 9,300 listings last summer, when Covid-related restrictions were lifted. At the current rate of sales, there is 8.8 months’ worth of inventory, only slightly higher than the 20-year average of 8.7 months.
For some agents, though, things are already looking up. Tyler Whitman, a salesman with Triplemint, said that after a price cut, several of his stagnant listings from 2020 began to sell this quarter. One TriBeCa condo, a three-bedroom listed for nearly $5 million, received six offers.
“I don’t even think the floodgates have opened yet,” he said. “I think we’re just getting started.”