Demand soared through spring and early summer for New York City real estate across all boroughs and price points. The ‘COVID Discount’ – once a 9% year-over-year decline in value – has adjusted to 4% in today’s market. Buyers of all stripes have taken comfort in the post-COVID economy: One where white-collar employment is steady, savings accumulated, and 30-year fixed mortgage rates are just 3.38%. The real estate bug which hit every corner of the United States seems to have finally arrived in Olde New York as millennials plan for their futures and purchase homes. Some fodder:
-Contract activity raged through the Spring of 2021 as it made up for lost time during peak COVID. $3.5B in contracts were signed in April which broke a 7-year record and that was followed by $3.37B in deals signed in May.
-Every week since February has seen more than 30 contracts signed at $4 million and over – this is the longest run in over 13 years.
-With work-from-home at the front of everyone’s mind buyers now prefer larger apartments. The average size of units that changed hands was 1,241 square feet - the second largest since 2015. That helped push the median sale price for all deals up 13% to $1.13 million, the highest in eight quarters, according to appraiser Jonathan Miller.
New York City buyers expecting the robust discounts of 2020 need to adjust expectations to the new realities on the ground. But I’d argue there’s still strong value to be had in today’s market even with the recent snap back in post-covid pricing. The comparables I study daily reveal lower prices over the last six years – like this 11.5% discount relative to the peak of 2015 on a resale. So, while sellers have adjusted their pricing expectations lower to allow for the strong contract activity above, I encourage buyers to remember that the market was already subdued heading into the pandemic.
I’ve had the pleasure of working through this challenging environment on over 20 transactions in the first half of 2021. This has run the gamut from off-market findings in the Red Hook townhouse market to Upper West Side coops to warehousing for a mobile scooter company. It has been a pleasure serving you during this time. Please reach out anytime with your questions on the market.
The Roebling Group