A pedestrian is in front of a Manhattan condominium building in New York.
Mark Abramson | Bloomberg | fake pictures
Second-quarter Manhattan apartment sales experienced their biggest decline in 30 years, and the worst quarter on record, as the property shutdown and urban leakage after the Covid-19 crisis froze the market.
Total sales in the second quarter fell 54%, the largest percentage decline in 30 years, according to a report by Miller Samuel and Douglas Elliman. The average sales price fell 18% to $ 1 million, which is the biggest decline in a decade.
There were only 1,147 sales in the quarter, the lowest number on record, according to Compass.
While the data is retrospective and reflects the sudden shutdown of the New York City property market and economy during the coronavirus pandemic, the extent of the decline shows just how far Manhattan real estate has to rise to recover. Brokers were banned from showing apartments from March through June 22, so buyers have only been able to start buying again last week.
“Manhattan was effectively closed during the second quarter until the last week,” said the Miller Samuel report, Elliman report.
While the deals could take a while to materialize, sales contracts also fell in June. The number of new contracts signed for cooperatives fell 78% in June compared to the previous year, according to Miller Samuel and Douglas Elliman. Condo contracts signed fell 74%. Cooperatives in the $ 2 million to $ 4 million range were the most affected in June, down 86%.
Brokers say businesses have returned quickly since the exhibition ban was lifted last week, with an avalanche of buyers looking for apartments.
“Agents are going nonstop right now,” said Bess Freedman, CEO of Brown Harris Stevens.
However, many potential buyers, especially the wealthy, have left the city during the summer to camp in the Hamptons, New England, or the West, and may not return to the market until fall or later. Some may not return, given the health problems and the lasting impact of the Covid-19 crisis on New York’s facilities and infrastructure.
It also remains to be seen whether the discount offers that buyers expect will materialize. With so few deals, analysts say true pricing remains a big question mark. So far, sellers are only slashing prices in single digits, which may not appeal to the current discount-minded buyer. So far, buyers bidding more than 10% off the starting price are being turned down, according to research by broker Fritz Frigan of Halstead.
“Sellers cannot marry pre-pandemic prices,” said Freedman. “Everyone must be reasonable and fair about the new environment.”
Brokers say the most immediate pressure will be on the rental market, as tenants can more easily leave the city, and fewer tenants are moving out.
“There will be an incredible offer of rentals,” said Freedman. “We are going to see a lot of negotiations and incentives for the owners.”
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