The Q4 2020 Manhattan Residential Real Estate Report
The most important takeaway from Corcoran’s Fourth Quarter 2020 Manhattan residential real estate report, is that closings in Q4 represented deals that were done after the pandemic had an impact on the market. Now we have a clear picture of what post Covid pricing looks like. The second most important finding is that signed contracts increased significantly, indicating that the Manhattan real estate market has stabilized after being shut down earlier in the year. The market is showing signs of resilience.
Here’s what happened during the Fourth Quarter 2020 in Manhattan:
• Manhattan ended 2020 with the market showing signs of stabilization and resilience. In Q4 2020, closings grew versus the previous two quarters, signed contracts returned to pre-COVID levels, and inventory growth slowed.
• Deal activity increased significantly in Q4 2020, seen in both the annual gain in signed contracts and quarterly growth in closings. Year-over-year, contracts signed rose 8%. Closings rose 18% versus last quarter thanks to the increase in contract activity after reopening.
• Increased inventory is still one of the most significant headwinds facing the Manhattan market’s broader recovery. Supply remains much higher than Q4 2019 due to the surge in new listings upon reopening. Available inventory is up 36% year-over-year to 9,964 units.
• In Q4 2020, over 90% of closings were for deals inked since March, giving a clearer picture of COVID-driven price trends and buyer preferences. In Q4, value-seeking buyers closed on larger apartments but prioritized space and layout over building and location.
The median price increased to $1,044,000, representing a 4%, year-over-year increase, because buyers were closing on larger apartments in the fourth quarter and not because prices increased overall. The more accurate indicator of where we are, is the average price per square foot, which is now $1615/ foot; an 8% decline from last year, and a four year low. So we can say in general Covid took 8% out of the market. However, remember in 2020 negotiability increased as the price of the property increased, with many properties under $1 million, going over asking. Bidding wars on well-priced properties were not uncommon. Meanwhile on the high end of the market we have seen decreases in pricing by as much as 40%, motivating buyers to snap up some great deals. When it comes to pricing, what is clear from the market data is that buyers are seeking and finding value.
At the end of 2020, I told you the inventory had come down in the month of December and that is true. In November and December we did see lower inventory compared to the month of October due to increased signed contracts and sellers taking their properties off the market for the holiday season. However, year-over-year inventory is up by 36%. While that is high, I am reluctant to over emphasize the supply increase, given the fact that I continue to see stable demand. Many buyers are moving within Manhattan, trying to find a home which accommodates their new lifestyle.
The number of listings under $1 million increased by over 50% from 2019 and more than three quarters of those listings were studios and one bedrooms. In my opinion this segment of the market is getting the most amount of listing activity as buyers find they need more space or relocate to new cities while investors retreat from a tough rental market. I am expecting this segment of the market to show more strength toward the end of the year as we are able to return to our offices. The only category seeing a decline in inventory was new development. Some new developments were taken off the market, turning into rentals. Six new buildings were brought to market with only a fraction of those units actively listed, which is a common practice.
Contracts signed is one of my favorite indicators because it gives us information about what just happened. Closings can take 60 days so there is a time lag on reporting those numbers. Contracts signed typically represent the business which has been done over the past one to four weeks. In the fourth quarter, contracts were up 43% over the third quarter. This is a huge increase, demonstrating buyer confidence in New York City for the long term. Year-over-year contracts were up 8%. So while pricing may have adjusted downward, demand is showing strength. In terms of transactions we are seeing far more activity than we did in 2019. I am expecting this trend to continue because of not only the new pricing established in 2020, but also the changes in lifestyle which Covid has brought about.
To read the full report go to: https://inhabit.corcoran.com/new-york-city-real-estate-market-report-q4-2020/
Are you thinking of buying or selling residential real estate in NYC in 2021? Reach out for your FREE consultation and a copy of the Fourth quarter report: firstname.lastname@example.org,917-690-4861.
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