We are halfway through 2020 - hard to believe. With all that is going on in the world, time has seemed to move at a relatively quick pace. Q2 2020 was one for the record books. The new year started off on a positive note for the Manhattan real estate market - strength had been carried over from 2019 across multiple tiers of the market. As we approached the start of Q2, no one was anticipating the magnitude of impact the market was going to experience.
The final two weeks of the first quarter brought never before seen conditions to the Manhattan Real Estate market.
While we hope that Q2 2020 is an outlier when we look back on historical quarters, it is important not to write off the entire quarter, but rather acknowledge the data and understand the impact of the pandemic during the observed time period.
Coronavirus Impact on Manhattan Market Evident in Q2 Data
Understanding the sweeping restrictions that were put into place in New York City that included the suspension of real estate showings, it comes without shock the YoY data is significantly lower when comparing 2020 to 2019. During Q2, the real estate market was essentially put on hold, the first time in history.
Contract Activity was down 73% YoY
Sales were down 65%
There are a few key thoughts worth noting on the data above:
1. The Contract Activity number actually could have been lower, however, the industry nimbly adapted to digital tools including virtual open houses, enhanced 3-D staging, and virtual closings.
The use of digital technologies will only continue to increase as consumers implement tech oriented solutions throughout all aspects of their lives to make it efficient and safe.
2. This data is important to be aware of, but it likely does not have long term predictive value knowing the restrictions that were placed on the industry with physical showings halted. In that sense it is expected, and we hope this quarter to be a Black Swan event
Sales Statistics
Co-ops sold 26% faster than condos with 1 bed Co-Ops moving the fasting - 47% sold within 60 days
Condos purchased in Q2 were more affordable than previous quarters because of property variations, not discounts or undervaluations
Downtown captured 28% of sales, the highest of any submarket
Properties in the $5-$10M range were priced 7% higher on average YoY although property size was also 8% larger, resulting in a 2% decline in average price per square foot
Looking Ahead
Monitoring data points in Q3 and beyond will be critically important to understand long term potential. In-person real estate activity resumed in late June, and the news came as contract activity was beginning to pick up.
The Pandemic will certainly leave lasting impacts on the market, and as of now, we see that in the form of consumers looking to leverage technology as much as possible to ensure safe and efficient business transactions as well as shifting preferences.
We expect increased interest in private outdoor space, home offices, layouts with defined spaces, and in the city, a renewed interest in townhouses and boutique buildings.
We will continue to monitor the pent up demand that has begin to re-enter the market.