October Market Update
We hope that everyone is safe, doing well, and enjoying the change in seasons. The days are getting shorter, the weather is more brisk, and the quaint, tree-lined city blocks are beginning to display their colorful, autumnal leaves. The fall season is typically our second most active season in New York City real estate, as business tends to heat up right before the seasonal slowdown associated with the holidays, and chillier winter temperatures. While nothing is ‘typical’ this year, we are expecting a busy October and November, as many of the city’s residents ‘get back to business.’
Record low interest rates and low inventory have set most housing markets around the country ablaze. Minimal days on market and bidding wars are characterizing much of the country. While we are seeing differing levels of opportunity, it is fair to say that most NYC market segments are currently experiencing a buyers’ market, in contrast.
Initially, inventory spiked after our market reopened, but that has leveled off in recent weeks. The sales market has subsequently seen a stabilization after an initial knee-jerk decline. While there is still uncertainty surrounding COVID, the election, foreign currency dynamics and equity markets, much of this ambiguity is currently priced in.
Since reopening in July, there have been 1,500 signed contracts in Manhattan. We have seen 49% of those signed contracts occur under $1 Million, and 28% between $1-2 Million. This is currently exposing higher price-points to more pronounced negotiability. In this low volume environment, however, pricing has not yet been fully cemented and there is opportunity to beat the market – true for both buyers and sellers.
In general, we are seeing discounts from original asking price in the order of approximately 7% under $1 million, 9% between $1-2 million, 11% between $2-3 million, 13% between $3-5 million, and approximately 15% above $5 million. In Manhattan, co-ops are making up 58% of the sales activity, while condos have comprised 39%. Uptown has been outperforming midtown and downtown, and resales are holding up relatively well compared to the vulnerable new development segment.
Manhattan is NYC’s wealthiest borough. Many of the city’s well-healed residents are returning from their second homes. This short-term departure from the city amounted for much of the news surrounding the NYC ‘exodus.’ Now that they are back, many are looking to upsize, add outdoor space, and some are looking towards Brooklyn or Queens.
Brooklyn and Queens are seeing particularly robust sales activity in the single-family home market. Brooklyn and Queens’ new development market is also showing more life. In fact, 7 out of the 10 NYC neighborhoods that are seeing the most new development sales are in Brooklyn and Queens – neighborhoods that are easily commutable to Manhattan. 62% of the new construction sales in Brooklyn and Queens are trading below $1 million, in contrast to 40% this time last year. 41% of these buyers are buying with cash. This is the lowest level since 2014, which is opening the door to many first-time homebuyers, who in other markets would lose out to deep-pocketed investors.
While NYC was hit hard at the outset by COVID, it has become a beacon of hope for the proper mitigation of the virus in recent months. NYC has the highest number of tech employees and tech jobs in the country, and is the nation’s number one city for finance jobs. It is also the number one tourist destination city in the country, the diplomatic capital of the free world, as well as the fashion, art, entertainment and culinary capitals of the U.S. Prices and deal volume are currently down, but there is no expectation that this will be a long-term situation. We expect to see an uptick in activity after the election, and then more of a bounce in the spring as we move past much of the current volatility. Also, with weakness in the condo market and the dollar’s value falling, we expect to see more foreign buyers returning to NYC to take advantage of this confluence. With proper guidance, there are many ways to take advantage of this dynamic and intricate market. More than ever, a data-driven, research-based approach, rooted in decades of experience, will equip our clients to thrive in this environment. Please stay safe and let us know if we can answer any questions you may have about the market, or how best to navigate complicated decisions.