The Manhattan luxury market continues to see positive signs of increased activity. Most recently, the week ending July 26th marked the best week for Manhattan’s luxury market since March. This also coincided with New York City entering the final phase of the New York Forward plan, Phase 4.
15 properties priced $4M and up went into contract during the week ending July 26th. Digging in, deals were characterized by discounts which comes as no surprise, however, many Buyers are likely unaware of the magnitude of the deals that can be had. On average, properties going into contract had a discount of 18%. A Buyer’s market coupled with historic low interest rates create opportunities that could reward serious Buyers handsomely over the longterm.
During the same week last year, 14 homes priced above $4M went into contract, so 2020 actually represented a slight YoY increase in contract volume. Additionally, a report on new developments showed the highest number of sponsor contracts in the city since the beginning of April. 40 sponsor contracts were signed the week ending July 26th, an increase of 17 since the prior week.
A mix of property types including 9 Condos, 4 Co-Ops, and 2 townhouses
Understanding the Headlines
It is important to understand what is happening in the New York City housing market before falling victim to the peril of headlines such as “Real Estate Prices Fall Sharply in New York”. It is important to remember that, particularly within the luxury sector, discount from asking has been a common theme to deals for nearly 2 years - if you subscribe to our monthly newsletter, you are familiar that this has been a persistent theme.
Additionally, Q2 2020 data should be taken with a grain of salt as drawing out longterm trends is difficult. Showings were legally not allowed during Q2 as a result of the Pandemic, so activity inherently came to a near halt. With less homes being bought and sold there is less data, and with less data it is important to remember that baselines can be easily skewed. This year’s Q2 data is based on a much smaller sample size which can skew the median price.
We expect Q2 2020 data to show a decrease in price YoY. This comes as no surprise knowing that activity was not allowed, however, because of the lack of data coupled with the inability to show, the viability of this data for longterm trend analysis is not ideal.
Furthermore, the comparison point to a year ago, namely Q2 2019 was characterized by unique activity itself. Q2 2019 had elevated activity because of the rush to close before the start of the new progressive Mansion Tax. Thus, a period of low activity (2020) compared to a period of high activity (2019) both from unexpected outside factors, creates a comparison with flawed data points.