Quantifying Manhattan Residential Real Estate’s Catastrophe Resiliency

Photo by sebastiaan stam on Unsplash Manhattan real estate is both dense and vertical, two traits which can, unfortunately, amplify the damage to both life and property during a disaster. However, Manhattan real estate’s resiliency and recovery, in the face of catastrophe, is exceptional as we explore in the following case studies: As New Yorkers remember all too well, the attacks on the World Trade center occurred on September 11, 2001. As of year-end 2001, despite the trauma and fear that ensued, Manhattan’s average condo price per square foot had increased nearly 13% over the year prior. And even the Financial District (“FiDi”) which, of course, was the site of the terrible atrocity, had given back less than 11% of the prior year’s price/sf watermark. Over the course of the next seven years, Manhattan average price/sf doubled, while FiDi average price/sf increased by 161%. In January 2020, just before the words “Coronavirus” and “COVID” entered our vocabulary and the virus began it’s deadly onslaught on NYC, Manhattan median condo price per square foot had posted a month of solid gain. However, over the next 4-months, price/sf slid 18%, briefly breaking through the $1,400/sf support level established in the second half of 2019. And, after trading along that support level through Q1–2021, condo price/sf appreciated a dramatic 42% to finish out 2021. As these two unfortunate tragedies illustrate, Manhattan residential real estate (represented by condominium price/sf) dips modestly, recovers quickly and appreciates rapidly post-catastrophe. Please contact us if you would like to learn more… About Us Our goal is simple: to humanize the world of real estate. Michael Rossi founded Elegran in 2008 on the dual premise of motivation and innovation, with a third sustaining principle added over the years: care. Unique in the industry, the firm has quietly become a key player in the New York brokerage world. Elegran oversaw well over $500 million in sales volume in 2019, tripled market share in 2020 and sold $1B in 2021. Headquartered in the center of Manhattan, Elegran is solely dedicated to serving the incomparable needs of the New York City metropolitan region.

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Elegran Brooklyn Market Update: February 2022

Photo by Magnus Andersson on Unsplash Overall Brooklyn Market Update: February 2022 Brooklyn Market Update In the first month of 2022, Brooklyn saw a much-needed increase in overall supply as new inventory came to market. Brooklyn for-sale supply increased 8.2% from last month while remaining nearly 25% lower than the same time last year. Buyer demand meanwhile remains robust, with a similar number of contracts signed in January as were signed in December, and 18% more contracts than were signed last January. Taken together, the market is seeing an increase in demand and a decrease in supply, which has led to a 60% increase in the Market Pulse as leverage has shifted further to sellers and away from buyers. From this shift in leverage, negotiability has decreased 38% and the median sales price has grown 5% over the last year. Additionally, similar to Manhattan, the luxury segment of the Brooklyn market is leading much of the demand surge, with contract activity in the $2–5M price range up 21% in the last month and up 86% in the last year. Brooklyn Supply increased by 8.2% in January to 2,359 homes available for sale with 946 new listings coming to market in January. A January increase in supply is seasonally normal and January’s new supply was 96% higher than in December and 3% higher than last January. INVENTORY: Key Takeaways Supply increased for the lower price points ($2M and below) and decreased for the higher price points ($5–10M and above). There was no change in the inventory level for homes priced $2–5M. Compared to last year, Brooklyn supply decreased by double digits across all price points except for those priced above $10M. Bed-Stuy continues to have the most inventory [140] compared to the other neighborhoods, followed by Downtown Brooklyn [101]. Park Slope and Williamsburg are tied for having the fewest listings [70]. Studio apartments accounted for the least amount of inventory available and 3+ bedrooms once again comprised the bulk of the market inventory. Brooklyn Buyer Activity, as measured by signed contracts, remained virtually unchanged in January with 729 contracts signed, compared to 733 in contracts signed in December. Compared to last year, contract activity is up 19%. CONTRACT ACTIVITY: Key Takeaways By price point, contract activity decreased across the lower price points ($2M and below), while increased across the higher price points ($2–10M and above) compared to last month. In the last year, contract activity increased significantly in the $2–5M and $5–10M range, while the under $1M price range saw a comparable level of contract volume from the prior year. The $1–2M price point had the highest number of contracts signed [226], followed by the $600K-1M price range in which 213 contracts were signed in January. By neighborhood, contract activity increased the most in Bed-Stuy [+55%], and decreased the most in Downtown Brooklyn by [-17%]. Bed-Stuy saw the greatest number of contracts signed this month [65]. Measured by bedroom count, the number of contracts signed this month decreased for studios[-30%] and increased the most for 1-bedrooms [+10%]. Over the last year, contract activity increased across the size ranges. Although buyer demand is consistently high, rising supply is driving down Brooklyn’s Market Pulse, as buyers have more choice and sellers have more competition. The Market Pulse dropped nearly 11% in Brooklyn this month to 1.22 and remains 60% higher than last year. The Market Pulse [a ratio between pending sales and supply] is an indicator of leverage between buyers and sellers. A Market Pulse below 0.4 is considered a buyer’s market, a Market Pulse between 0.4 and 0.6 is considered a neutral market and a Market Pulse above 0.6 is considered a seller’s market. MARKET PULSE: Key Takeaways Compared to last year, the market pulse increased across all price ranges, neighborhoods, and bedroom sizes, with the exception of homes priced above $10M which decreased 24%. The market pulse decreased in the lower price points ($2M and below) and increased in the higher price points ($2–10M and above) compared to last month. The Market Pulse is highest for the $600K-1M price range at 1.42, followed by the $1–2M price point at 1.4. Park Slope has the highest market pulse [2.41], followed by Williamsburg [1.91], which indicates the intense competition amongst buyers in those areas. Both neighborhoods had an increase insupply in the last month, contributing to their declining market pulse, while remaining among the highest. Downtown Brooklyn is a bit less competitive with a market pulse of 0.93, the only neighborhood with a Market Pulse below 1. The market pulse decreased across all bedroom sizes compared to last month. Pricing & Discounts The Median Sales Price in Brooklyn increased 1% from last month and increased 4.9% from last year to $962,500. On a price per square foot [PPSF] basis, the median increased 2% from last month and decreased 5% from last year to $965. MEDIAN PPSF: Key Takeaways The median price per square foot increased across all neighborhoods except for in Brooklyn Heights and Downtown Brooklyn compared to last month. While decreasing in Brooklyn Heights this month, the neighborhood has the highest median PPSF [$1,457]. The median price per square foot remained lower, by comparison, in Bed-Stuy at $958. By bedroom counts, the median PPSF decreased across studios and 1 bedroom apartments, and increased across 2–3+ bedroom units both compared to last month and year. The Median listing discount in Brooklyn increased this month, indicating slightly more negotiability for buyers, aligning with a decreasing market pulse. Despite the increase from last month, the current median listing discount is still low, at 2.9%. This is an increase of 7.4% from last month and a decrease of 38% from one year ago. MEDIAN LISTING DISCOUNT: Key Takeaways The median listing discount increased for coops and townhouses this past month, and condos remained unchanged. Townhouses continue to have the highest median listing discount [5.5%] and Condos have the lowest [1.2%]. By price point, the median listing discount increased for homes priced $2M and below, decreased for those priced between $2–5M, and was unchanged for the $5–10M and above price points. Park Slope had no change from last month and still has a negative median listing discount, [-0.5%], indicating that on the median, homes are selling for half a percent above the asking price. In regard to bedroom size, 2-bedroom homes have the least negotiability. What this means for… Buyers: The Market Pulse is declining as supply has increased, although buyer demand is remaining consistent. Inventory has increased in the sub $2M price points and has not increased yet in the higher price points. As new inventory comes on the market in the sub $2M price points, buyer leverage has increased slightly. The $2–5M and $5–10M price points saw a large increase in contract activity over the last month and year, while the under $2M price points saw a decline in contract activity in the last month. Park Slope and Williamsburg, two of the neighborhoods with the highest Market Pulse and lowest negotiability, also saw the largest increase in new inventory in the last month, potentially creating a window of opportunity for buyers. Mortgage interest rates are increasing, and are projected to increase throughout 2022, potentially spurring buyers to act sooner than later. Sellers: The “spring listing season” has accelerated and more sellers are coming to the market sooner, trying to capitalize on the first mover advantage to stand-out to buyers eager for new inventory. As supply increases, sellers will face increased competition for buyers from other sellers. Renters: Rents have increased significantly over the last year and are hitting new records. In the face of rising inflation and increased rent renewal rates, now can be an ideal time to consider buying rather than renting. Rental supply continues to decline as tenants are often choosing to renew their leases rather than move into a new rental. Tenants facing a lease renewal will experience rising rent prices and landlords unwilling to negotiate or offer concessions. Competition is fierce amongst prospective renters, with apartments often receiving multiple offers and frequently going to bidding wars. Investors: With attention on rising inflation, real estate offers a hedge against inflation. Rising rental rates and increasing cap rates are creating an incentive for investors to explore investment opportunities in Brooklyn. Please contact us if you would like to learn more… About Us Our goal is simple: to humanize the world of real estate. Michael Rossi founded Elegran in 2008 on the dual premise of motivation and innovation, with a third sustaining principle added over the years: care. Unique in the industry, the firm has quietly become a key player in the New York brokerage world. Elegran oversaw well over $500 million in sales volume in 2019, tripled market share in 2020 and sold $1B in 2021. Headquartered in the center of Manhattan, Elegran is solely dedicated to serving the incomparable needs of the New York City metropolitan region.

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Elegran Manhattan Market Update: February 2022

Photo by Sam Trotman on Unsplash Overall Manhattan Market Update: February 2022 Manhattan Market Update In the first month of 2022, Manhattan real estate continued its remarkable recovery from its Covid lows after the Spring of 2020. As a result of months of record-setting buyer demand and dwindling inventory, prices are rising at levels not seen in nearly half a decade. Much of this growth is driven from a strong demand for luxury properties [typically defined as the top 10% of the market by price], and the strength of the luxury segment is typically seen as a bellwether for the overall health of the real estate market. After the bid-ask spreads have been declining over the last year, Manhattan’s median sales price rose 12% and Manhattan’s median price per square Foot [PPSF] rose 9.2% compared to last year, indicating a healthy recovery of the local market. This price appreciation is fueled by a combination of robust demand and declining supply. A healthy level of new supply came to market in January, as the spring market accelerated, and supply appears to have bottomed in mid January. Whether buyers get a momentary reprieve in the market will depend on how much new inventory comes to market in the coming weeks, and how quickly motivated buyers pounce on the inventory. Manhattan Supply Total supply bottomed in January at around 4,700 units for-sale before increasing in the second half of January. At the end of January there were 4,984 units for-sale, half a percent higher than last month and the second month in a row where supply was below 5,000 units. Supply is now beginning to increase, as new listings come to market as per traditional seasonal patterns and more than double the number of new listings came to market in January compared to December. Monthly new supply A high level of new supply came on the market in January, with 1,458 new listings, slightly below the level in 2019 and 2020, and well above the level in 2021. Total supply Despite the high level of new supply, overall supply is significantly lower than in preceding years, in large part due to the high level of buyer activity. Total Manhattan supply in January is sharply lower than in each of the preceding three years. The current level of supply is comparable to the levels seen in 2017 and 2018, which is higher than in 2014 and 2015, and significantly lower than in 2020 and 2021. Note: “Total Supply” refers to the amount of inventory on the market at a given time. “New Supply” or “New-to-Market” refers to the amount of new inventory that came on the market in a specific time period. INVENTORY: Key Takeaway Compared to last year, Manhattan supply decreased double digits on a percentage basis across price points, neighborhoods, and bedroom counts. By price point, inventory in the $600k-1M and $2–10M price ranges increased, while the $600K and below and $10M and above price points decreased compared to last month. There was no change from last month for supply priced between $1–2M. Inventory on the Upper West Side and Midtown decreased, and increased in the other neighborhoods in the last month. By bedroom size, 1 and 2 bedroom apartments increased by 1%, while studios decreased by 1% and 3+ bedroom units had no change from last month. Manhattan Buyer Activity as measured by signed contracts, continued to set a decade high for the month of January with 943 contracts signed, narrowly exceeding the level seen in 2014 and 2021. While contract activity declined 14.5% from December, it increased 2% from last January. Notably, the luxury segment of the market continues to experience robust contract activity. Contract activity in the $10M+ price range increased month over month and had the largest percentage increase year-over-year. Homes priced $2–5M and $5–10M also experienced a significant increase in contract activity compared to last year. CONTRACT ACTIVITY: Key Takeaways Compared to last month, Manhattan contract activity decreased across all price points, neighborhoods, and bedroom counts with the exception of apartments priced at $10M and above [+3%]. Compared to last year, Manhattan contract activity increased across all price points, neighborhoods, and bedroom counts with the exception of apartments priced between $600K-1M and those in Upper Manhattan. The Upper East Side and Upper Manhattan had the greatest decrease in contract volume [-25% and -21% respectively] over the last month. 2-bedroom apartments saw the smallest percentage decrease in contract activity over the last month, and also the smallest percentage increase over the last year. Manhattan’s Market Pulse [a ratio between pending sales and supply] decreased by 6% this month to 0.84. This decrease indicates a slight shifting of leverage from sellers towards buyers as supply increases. While the Market Pulse decreased this month, Manhattan is still in seller’s market territory and the Market Pulse can rise again as contract activity increases in subsequent weeks. A Market Pulse below 0.4 is considered a buyer’s market, a Market Pulse between 0.4 and 0.6 is considered a neutral market and a Market Pulse above 0.6 is considered a seller’s market.] In a seller’s market, sellers often have more leverage than buyers because demand is greater than supply, resulting in apartments selling quickly, fewer discounts and increased bidding wars. MARKET PULSE: Key Takeaways The Market Pulse decreased across the board in all price points, neighborhoods, and bedroom counts this past month except for apartments priced at $10M and above and those on the Upper West Side where there was no change. By price, only apartments priced between $600K-1M have a Market Pulse above 1.0. Compared to last year, Manhattan’s Market Pulse increased significantly across the board, with the largest percentage increase coming from the $5–10M and $10M+ price points, further reflecting the strong resurgence in the luxury segment. By neighborhood, the Upper West Side and Downtown Manhattan have the highest Market Pulse indicating an especially competitive market, with Market Pulse’s of 1.05 and 1.0 respectively. Pricing & Discounts The Median Sales Price across Manhattan for the month of January was $1,170,000, a 3% increase from last month and a 13% increase from last year. The robust demand, declining supply and dwindling bid-ask spreads are translating into rising prices, both on an overall median sales price and median price per square foot basis. The median price per square foot in January was $1,413, also a 3% increase from last month and a 9.2% increase from last year. Taken together, Manhattan is seeing notable price appreciation from the COVID lows. MEDIAN SALES PRICE: Key Takeaways By neighborhood, the median sales price for condos and coops on the Upper West Side rose in the last month. Condos Downtown saw a decrease year over year while Coops Downtown saw an increase. Coops in all neighborhoods saw an increase year over year. All size coops and condos saw an increase year over year. A more accurate and consistent representation of price appreciation is the Median Price per Square Foot [PPSF], which was $1,412 in January, a 3% increase from December. MEDIAN PPSF: Key Takeaways Median PPSF increased across all price points in the last month except for units at $600K and below, which decreased by 1%, and units priced at $10M and above which had no change. The largest percentage increase in PPSF over the last year occurred in the $10M + price point, followed by the under $600K price range. Over the last year, Upper Manhattan saw the largest percentage increase in PPSF while Downtown saw the smallest increase. Compared to last year, the median PPSF foot increased across the spectrum except for in studios, which decreased 10%. Median listing discounts in Manhattan Continue to Decline Median listing discounts continue to trend downward, decreasing over 50% from last year and down another 2% in the last month to 3.6% at the end of January. MEDIAN LISTING DISCOUNT: Key Takeaways The median listing discount increased for Co-ops and Townhouses, while decreasing for Condos. As expected, the median listing discount is greatest for townhouses [11.1%]. Compared to last month, the median listing discount decreased across all price points except for those priced between $2–5M. Compared to last year, the median listing discount decreased by double digits across all categories. Across all neighborhoods, the median listing discount increased in all areas, except for in Midtown Manhattan, which decreased 6% compared to last month. The median discount is highest for properties in the Upper East Side [4.5%] and lowest for properties on the Upper West Side [2.8%]. By bedroom size, 1-bedroom units have the smallest median discount. What this means for… Buyers: Listing negotiability continues to decrease and prices are rising. While the Market Pulse has decreased slightly, as supply has risen, leverage remains firmly with sellers. While more negotiability exists in the higher price points than lower ones, the amount of negotiability is decreasing. New inventory is coming to the market regularly, and buyers should be prepared and well-positioned to act. Buyer demand has increased substantially in the last year for properties priced above $2M. Mortgage interest rates are increasing, and are projected to increase throughout 2022, potentially spurring buyers to act sooner than later. Sellers: The “spring listing season” has accelerated and more sellers are coming to the market sooner, trying to capitalize on the first mover advantage to stand-out to buyers eager for new inventory. While prices are rising, sellers still need to price according to today’s market to be competitive. As supply increases, sellers will face increased competition for buyers from other sellers. Renters: Rents have increased significantly over the last year and are hitting new records. In the face of rising inflation and increased rent renewal rates, now can be an ideal time to consider buying rather than renting. Rental supply may have bottomed in the middle of January at about 2,500 units for rent before increasing slightly in the second half of January. Tenants facing a lease renewal will experience rising rent prices and landlords unwilling to negotiate or offer concessions. Competition is fierce amongst tenants, with apartments often receiving multiple offers and frequently going to bidding wars. Investors: As Manhattan real estate begins to appreciate again, it presents a compelling alternative to other domestic markets that have already experienced incredible price growth over the last two years. With attention on rising inflation, real estate offers a hedge against inflation. Rising rental rates and increasing cap rates are creating an incentive for investors to explore investment opportunities in Manhattan. Please contact us if you would like to learn more… About Us Our goal is simple: to humanize the world of real estate. Michael Rossi founded Elegran in 2008 on the dual premise of motivation and innovation, with a third sustaining principle added over the years: care. Unique in the industry, the firm has quietly become a key player in the New York brokerage world. Elegran oversaw well over $500 million in sales volume in 2019, tripled market share in 2020 and sold $1B in 2021. Headquartered in the center of Manhattan, Elegran is solely dedicated to serving the incomparable needs of the New York City metropolitan region.

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