In New York, we’re back to pre-pandemic levels, having regained the acknowledged 8-12% drop in property pricing from 3 years ago. This year, we’ve managed to avert disasters, but it was a helluva roller coaster ride!
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the shirley hackel team
Goodbye 2022. We are ready for 2023! We’ve lived through considerable challenges these last three years with inflation in the forefront running at a 40-year high, and Covid hangovers splicing into a variety of flu and mystery viruses.
In uncertain times, when world events and macro outlooks are dire, there’s no better urban center to invest in than New York City. Our residential market is leveling to be sure, but we’re holding our own. In fact, there’s opportunity, and smart home shoppers are buying.
What are we seeing?
In January, following a record setting 2021 post Covid recovery, I wrote that Manhattan real estate was poised for a strong 2022. Sales volume last year totaled $30B—6% greater than the previous record set in 2007. During the first half of this year, sales volume reached $15.6B, the highest half year mark in a decade.
In the last 30 days in the residential resale market, there’s been a steady rise in the number of price reductions. Listing supply has increased slightly, but that may ebb as we move further into the summer months. Contract activity has been relatively steady, despite the spreading uncertainty and unease created by a confluence of unmitigated factors, namely rising interest rates (up .75% yesterday with more hikes to come), the ongoing war in the Ukraine, out of control inflation and stock market volatility.
Are anxiety and uncertainty creeping into our marketplace this quarter with the current macroeconomic and geopolitical concerns?
The burst of new listings we were expecting to begin mid-January never materialized. As a matter of fact, the continuing low supply of properties is pretty significant. Here’s what we are seeing.
● As expected, after Labor Day and the Jewish holidays, a wave of new inventory appeared to the significant tune of 2,088 total new offerings across all product categories and price segments. Surprisingly however, supply dipped in the weeks following, and resale stock has become short again, frustrating buyers who were looking for more options and prompting multiple offers. New listings were down nearly 30% YOY in Q3, forcing buyers to act quickly and helping to drive sales.
With Labor Day and Rosh Hashanah coinciding on this year's calendar, it’s no surprise that the number of new offerings dropped last week, making 8 consecutive weeks of shrinking new inventory. What’s eye-popping is that 27 contracts over $4M were signed last week, with condos outselling co-ops by nearly 4:1. Even more surprising, the previous week from August 23-29 saw 23 luxury contracts inked with 5:1 condos to co-ops and 9 townhouses, the largest number of TH contracts since Donna Olshan began tracking this $4M+ market segment in 2006 and the strongest pre-Labor Day week since 2014. It was the sixth month in a row for record high contract activity.
August vacations may account for some of the market declines in inventory and contracts this month. With supply super scarce in outlying suburban markets, is it possible that Manhattan will mirror the shortages seen in Westchester, Connecticut and Long Island? As housing stock drifts lower each week this summer, the pressure is on for buyers who are competing for fewer properties.
The resilience of the Manhattan residential real estate market was on full display in the first quarter. A new year, new administration, low interest rates, and multiple and more readily available vaccines restored hope. Covid changed the way buyers look for and value space. With pent-up demand, today’s purchasers seek units with outdoor space and private areas for home offices, working out and gathering safely.
New York is alive and getting better. The change is palpable. Establishments have been reopening for business gradually. Restaurants, gyms, museums and movie theaters along with pedestrian and car traffic have returned. Hotel and airline bookings are up. In-person classes at public high schools are resuming this week. Vaccines are more readily available. Those who have been immunized are expanding their social circles, albeit tentatively. Yankee Stadium and Citifield will host the start of the baseball season with 20% fan capacity. Tourists are trickling back. Federal stimulus coins are jingling. Days are getting longer and warmer. And the spring selling season is well underway for New York City’s residential real estate market.
Yesterday’s NY Times front page story “Possible Boom Post-Pandemic” recognizes an economic sea change. We are turning the pandemic corner, and for that we are grateful. Economists are predicting a supercharged rebound for the U.S. Days ago, in a February 18th report issued in Washington D.C., Fannie Mae Sr. VP and Chief Economist Doug Duncan predicted a 6.7% GDP increase this year, simultaneously cautioning that the same reasons for expansion might also push up inflation. “Growth,” he noted, “will accelerate sharply beginning in the second quarter.” The news bodes well for residential real estate in New York.
A new president was sworn into office this noon, and as the Times aptly reported, his “To-Do List” is daunting. Primary among his tasks, President Biden has pledged to oversee the vaccination of 100 million Americans in his first 100 days. In New York, we’re looking forward to when most are inoculated, and we gain herd immunity and can look back on this dreadful nearly year-long Covid period.
We’re two weeks away from the start of a new year, and despite an accelerating pandemic and the closing of indoor restaurant dining, here are ten reasons to be optimistic about the New York real estate market of 2021.
Manhattan real estate is recovering. Signed contracts and transaction volume are up. Especially encouraging is activity on the high end which saw 21 contracts signed over $4M in the last week of September—the highest since lockdown and the strongest final week of Q3 since 2014 when 33 contracts were signed (per the Olshan Report).
April 12, 2020 When you read the press coverage for Q1 2020, it’s critical to evaluate the stats with multiple grains of salt. We’re not in the midst of a real estate slowdown; in New York, we are near a standstill. Consider that this January’s sales were pretty close to January 2019 totals, and February 2020 volume was actually 10% higher this year, and the first week in March 2020 saw 8% more contracts signed year-over-year. Then came Covid-19.
Early spring’s daffodils are here, and we’ve shed our scarves and gloves, but we find ourselves in uncharted waters during an unprecedented season. A new virus is threatening our lives and our livelihoods as it spreads angst, anxiety and confusion. With an incubation period of 2-14 days according to the CDC, and with symptoms appearing about five days after infection, the novel virus unnerves and unsettles us. Human distancing seems to be the most effective tool against the spread of this contagious disease.
At the threshold of a new decade, we greet 2020 with enthusiasm and optimism. We’ll celebrate Martin Luther King Day on the 20th. Had the Reverend lived, we can only speculate how he would have joined with other clergy to counter the current wave of horrific antisemitic violence. To my Chinese friends who will be hosting two weeks of new year celebrations from January 25th to February 11th, I wish you huge blessings and good fortune in the Year of the Rat. May you smile often.
Neither winter’s frost nor shortened daylight hours can dampen end-of-the-year holiday parties, with the first Chanukah candle at sundown on the 21st, Christmas on the 25th and Kwanzaa on the 26th. With flutes of champagne and mugs of hot chocolate, we’ll bid goodbye to the last month of the decade to welcome 2020. Merry New Year one and all!