Manhattan’s real estate market is making a comeback.
Home sales in New York City cratered during the pandemic — especially in Manhattan, where more affluent and mobile residents fled the city during the shutdowns — but sales numbers from brokerage firm Douglas Elliman, and appraisal and consulting firm Miller Samuel, suggest the borough is bouncing back.
“Sales activity surged 229% over last year,” said Jonathan Miller, president and CEO of Miller Samuel. That huge spike over last year is skewed, however, since sales were down by about 50% in the third quarter of 2020 due to the pandemic.
What is more compelling, he said, is the number of sales compared to the market prior to the pandemic. More apartments were sold in Manhattan last quarter than at any other time in more than three decades, according to the report. The 4,523 apartment sales in the quarter were more than triple that of the same period last year, but were also 77% higher than the same period in 2019.
“The reason we are having this demand in Manhattan isn’t just people coming back to the city from the suburbs, it is inbound migration from other parts of the country, with college students arriving and more institutions opening up,” said Miller.
The median sale price in the third quarter was $1,115,000, according to the report. That’s up 1.4% from a year ago, but $100,000 below the record median sale price set in 2019.
Luxury sales contributed to the strong sales growth, in part because the luxury market was so soft before the pandemic.
There was more growth at the higher end of the market than the lower end during the pandemic, Miller said, because of the heavier economic toll experienced by lower-wage earners. Apartment sales priced at above $4 million rose by 133% in the latest quarter compared to the third quarter of 2019, while the number of sales below $4 million increased by 73% from two years ago.
But the rest of the Manhattan market is coming along, said Miller.
“Compared to last year, the market is more normal,” he said. “All price sectors are strengthening, it isn’t just the top end.”
While historically low inventory has bedeviled housing markets across the US, in Manhattan the market was glutted with available apartments to buy during the pandemic. But that supply continues to tighten up. In the third quarter of this year, there was a 5.1-month supply of available homes at the current sales pace. That was down 26% from last quarter and down 75% from a year ago, when there was a pandemic peak of 20 months of available inventory.
Competition is heating up, with the share of bidding wars rising to its highest level in three years, according to the report.
But buyers are still less likely to have to fight to get a home in Manhattan than in a suburban area just outside of the city, Miller said. The share of bidding wars in Manhattan — defined as properties sold above the last listing price — rose to 8.3%, the highest share in three years. But that’s still way below the 31% record in Manhattan in the third quarter of 2015.
“We’re not seeing the same frenzy in Manhattan as the suburbs, but it has clearly increased,” said Miller.
Even with near-record-low mortgage rates, all-cash purchases were strong, accounting for nearly half of all purchases in the third quarter, the report said.
Overall, Miller said the data suggests the New York City market is moving closer to a pre-pandemic picture, even if New York still has challenges ahead of it. The continued growth in sales will be dependent, he said, on continued progress against the coronavirus and the degree to which mortgage rates rise.
“There is still a Covid-discount in some segments of the market,” Miller said. “But that is rapidly declining.”
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