Elegran Manhattan Market Update: October 2020
September kicked off a busy fall season with an influx of post-Labor Day new listings and robust sales transactions. The Manhattan sales market continues to be driven by local buyers with coop contract activity significantly higher than condo contract activity and 78% of the contract volume under $2M. With a fair amount of uncertainty prevailing, sellers now face the dilemma of whether to list now or wait until spring and those who need to sell now should plan to come to market quickly and price aggressively to attract the attention of buyers.
Manhattan supply saw a 14.2% increase, far more than the 5% increase we saw in August and reflective of the traditional post-Labor Day inventory surge. The Manhattan apartment supply is increasing and approaching similar levels to the 2008-09 Great Financial Crisis. The $5-$10M range also saw an 18% increase in supply. Year-over-year, the under $600K category saw a 43% increase in supply.
The under $600K and the $5-10M price categories saw large increases in contract signed volume from August to September, 25% and 73% respectively. The under $2M market and the $5-$10M saw more contract volume in September 2020 compared to September 2019. The below table depicts the number of contracts signed, and the change from last month and last year by price category:
It should be noted that the volume of contracts signed between in July 2020 was considerably less than the amount signed in July 2019, as NYC was shut down for 3 months prior to the quarter. However, August and September 2020 actually had more contracts signed than the same period in 2019. The media’s take on Q3 would have us believe that contracts were down substantially, creating “the sky is falling” headlines, the reality actually shows improvement in the market and transaction volume as we went through the summer and early fall.
Buyers continue to see increasing inventory at all price points and sizes, giving them increased choice and negotiating power. During the summer months we saw many buyers who had to move and purchased an apartment quickly after the lockdown ended at the end of June. Buyers today that have yet to purchase are generally more opportunistic and looking to take advantage of the current market dynamics and low interest rates.
The story is a bit different in Brooklyn, where the market is hotter than Manhattan. Brooklyn is experiencing more multiple-bid situations, bidding wars and overall smaller bid<>ask spreads than Manhattan. As a result, home shoppers in Brooklyn generally have more motivation to sign a contract than their counterparts in Manhattan.
The average pricing discount overall increased from just under 4% in August to just over 4.5% in September. Previously there was a smaller discount on average for properties priced below $1M than over $1M and that difference is almost non-existent in the current market. This is largely due to the increased inventory priced under $600K, giving consumers more choice and increasing seller competition in the sub $1M category.
The rental market saw supply peak the second week in September and then stayed level for the remainder of the month. Citywide the vacancy rate has crept above 5% for the first time in 14+ years, a sharp departure from the 1.5-2.5% vacancy rate of the last 10+ years. As such, it will likely take 1-2 years for the rental market to normalize and the vacancy to be absorbed, creating opportunities for renters in many neighborhoods.
In view of the ongoing crisis, it should be recognized that statistics alone do not present a full picture of the market. Now, more than ever, it is vital to have a trusted team of professionals, including your agent, mortgage broker and lawyer to take your preferences, finances and interests into account and assist you in successfully navigating the market.