We've just completed the first quarter of 2021. Now all the reports are streaming in on the state of the NYC real estate market. The same people who wrote about fleeing New Yorkers never returning and why New York may never recover, are giving us headlines like, "A Home Buyers' Bonanza in Manhattan" and "It's Alive!- New York Real Estate". Really? I'm all for recovery and shouting it from the roof tops, but let's put the sensationalism aside and look at what's really going on.
The article I am recommending most to my clients right now is "Manhattan Sales Market Poised for a Revival, Just a year after it Collapsed": "Poised..." is quite different than "bonanza." If you read that bonanza article, you find the "bonanza" they speak of is solely in new development. And the largest discounts are in ultra luxury buildings where price per square foot reaches more than $5,300. Some might say discounts given in these buildings can be attributed to sponsors' expectations becoming more realistic, prices leveling out. We saw this trend beginning before the pandemic. At that point, folks with $10M+ NYC apartments were the ones who could easily work from their beach houses, so that's where they went. That high-end luxury market went with them. But new development in Harlem is doing well. Bed Stuy: thriving. Yes, there are discounts, but no bonanzas. Sorry, if you are a buyer purchasing a home for less than $10,000,000 or so, you are not invited to the bonanza party.
The most solid stat I've encountered in all these market reports was the number of contracts singed in the first quarter: 3,708. That's the most contracts signed in Q1 since 2007. This is due to lower prices, low interest rates, renewed hope, and the vaccine roll-out. But the prices won't stay low for long if there is so much competition, some argue. Pre-pandemic, the market was riddled with stagnant, over-priced listings with sellers insisting their homes were worth more than they really were. I think the pandemic has softened the New York seller. Well, it has softened us all, hasn't it? We've all become more grounded in reality. I think the lower prices may stick for a bit, at least while inventory is still high.
Which it is: We have 18% more homes on the market now, compared to this time last year. Part of this can be attributed to the need to re-envision your living space with the new normal of working from home and virtual learning. Many are listing their homes to upgrade: bigger units with outdoor space. We also have a flood of first-time buyers entering the market, something I predicted back last May in a blog post ("People moving to the suburbs will cause rents and property values to eventually decrease and, lo and behold, we will have room for our artists again. We’ll have room for the young and aspiring who still dream of living in NYC.") People who have never before been able to consider a Manhattan home purchase, ARE! This goes beyond a market trend. It is so great for our city and it makes me thrilled for the cultural revival in our future.
With this influx of new home-buyers, I believe we are poised for a comeback. But it will be a steady climb over time with some spikes as we go. And we are seeing one right now in this busy Spring market, while prices remain on the low side. As for the "It's Alive!" article, it was written by a friend of mine, Fred Peters. And knowing Fred, I can hear the tongue in cheek way he probably said this in his morning sales meeting, making fun of all those who condemned New York so early. The headline aside, I very much agree with his assessment of the situation: "Well-priced units, especially those in great condition, are drawing attention from a large group of motivated buyers who want to make sure they get their bite of the Big Apple before it’s too late. Although they are shocked at first to find demand so much stronger than they anticipated, these buyers understand that for the good stuff, they now need to act quickly."
Get your bite, NYC! Let me help you do it. Don't get fooled by the bonanza bandwagon. Let me simply get you poised for a smart purchase.