Elegran Manhattan Market Update: January 2022

Photo by Filip Bunkens on Unsplash Manhattan Market Update Manhattan real estate set records in 2021 for the most sales, by both quantity and value, as the market makes a historic comeback from the COVID lows, and December was no exception. Supply is trending sharply lower, buyer demand (especially in the luxury segment) is growing, bidding wars are more common and prices are rising. Taken together, the Manhattan market is incredibly competitive and becoming supply constrained. In Manhattan’s post-covid recovery, demand initially came from local and first-time homebuyers, driving contract activity in the under $1M and then the $1–2M price points. In the fourth quarter of 2021, the luxury buyer returned in droves to Manhattan, driving up demand for properties priced above $5M. High-priced neighborhoods such as Chelsea, which saw an outpouring of residents during the early days of the pandemic, have recently seen an influx of moves, as buyers return to the city they love. Sellers who come to market early this year will find reduced seller competition and eager buyers for properties with in-demand characteristics such as views, outdoor space or recently renovated. Manhattan Supply Supply decreased 18.2% from last month, breaking below 5,000 to 4,730 listings on the market. Today, inventory is at the lowest level for this time of year since 2017. This is a stark change from December 2020 when there were 7,505 listings on the market, which was a decade high. Manhattan’s market is quickly becoming supply constrained as buyers continue to pounce on new inventory as it comes to market, which has led to more bidding wars and rising prices throughout the city. Monthly new supply: While overall supply is trending lower, in large part because of the sheer demand from buyers, there has been a historically high volume of new supply hitting the market. More new listings came to market this December than in any of ten preceding Decembers. It’s important to note that December has historically been a month where few listings come to market, as sellers often wait to list until late winter or spring. This December, 694 new listings came to the market, a 40% decrease from the prior month (November 2021) when 1,156 new listings came to the market. Total supply: Total Manhattan supply in December ranks fourth when compared to the last decade. Although supply is still technically at a high level, December 2021 presented a dramatic drop in inventory compared to 2020. Furthermore, supply feels lower due to the strong buyer demand and competition in the market. While prices have not recovered to their 2015 or 2016 peak levels, momentum and velocity in the market are currently reminiscent of the peak years (2015–2016) for Manhattan real estate. 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 Takeaways Manhattan supply, on a percentage basis, decreased double digits across nearly all price ranges, neighborhoods, and bedroom counts over the last month and year. Inventory decreased the most in the $600k-1M price range and decreased the least in the $2–5M price range. By neighborhood, inventory decreased the most in the Upper East Side [-22%], and decreased the least in Upper Manhattan [-9%]. Supply of 1 and 2 bedroom apartments decreased the most, by 19%, and studios and 3+ bedroom units decreased by 15% and 17% respectively. Manhattan Buyer Activity as measured by signed contracts, continued to set a decade high for the month of December with 1,132 contracts signed. Contract activity in the month of December has not been this high in the last decade. Similar to last month, the number of contracts signed in December outpaced monthly new supply by 438. There were 190 more contracts signed this month than last year in December 2020. An increase in contract activity is indicative of a continued uptick of buyer activity and renewed confidence in the recovering New York City real estate market and New York City despite the Omicron outbreak, especially in the luxury segments. Contract activity for the luxury segments of the market has been increasing in the last quarter, and there was a 100% and a 215% increase in contract activity for apartments priced $5–10M and $10M + in 2021 compared to 2020. Apartments priced $2–5M saw a 48% increase in contract activity during the same period, compared to a single digit percentage increase for properties priced below $2M. CONTRACT ACTIVITY: Key Takeaways Manhattan contract activity increased across all price points, neighborhoods, and bedroom counts compared to last year, except for Upper Manhattan, which decreased 12%. Compared to last month, the number of contracts signed decreased across all price points, neighborhoods and bedroom counts except for the $10 and above price range [+3%] and in Downtown Manhattan [+2%]. The higher priced apartments saw the greatest percentage increase in contract activity year-over-year, indicating the recent resurgence of the demand in the luxury market. Apartments in the $2–5M price range had the greatest number of contracts signed [286], followed by apartments in the $600K-1M price range [265]. Contract volume in Midtown Manhattan decreased the least by 12%, and the number of listings signed [354] surpassed all of the other neighborhoods. Manhattan’s Market Pulse [a ratio between pending sales and supply] increased by 28.4% this month to 0.98, indicating a strengthening seller’s market as supply decreases sharply and contract activity remains high. The decline in supply is primarily responsible for driving the Market Pulse higher. As a result, this is a favorable time for a seller to come to market. Sellers who come to market sooner can experience first mover advantage and take the lead of strong buyer demand and reduced seller competition. The Market Pulse is reflective of a strong sellers market. 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. Manhattan Market Pulse MARKET PULSE: Key Takeaways The market pulse increased across the board in all price points, neighborhoods, and bedroom counts, compared to both last month and year. As expected, the lower price ranges remain more competitive compared to the higher price ranges, as apartments priced at $2M and below have a market pulse above 1.0. Apartments priced between $600k-1M have the greatest market pulse [1.15], followed by the $1–2M price range [1.09]. Most of Manhattan remains a firm sellers market with market pulses greater than 0.6, except for apartments priced at $10M+, although that segment’s market pulse is rising at the fastest rate, having increased 54% in the last month and 330% in the last year. Compared to last year, the market pulse increased triple digits across all price points, neighborhoods, and sizes, except for the under $600K price range and the Upper Manhattan neighborhood, which increased by 89% and 57% respectively. The market pulse is the strongest in Downtown Manhattan [1.16], indicating the strong desirability for the area, and is lower in Upper Manhattan [0.74] compared to the other neighborhoods. On trend, 1-bedroom apartments remain more competitive than 3+ bedroom units with a market pulse of 1.13 and 0.73 respectively. Pricing & Discounts The Median Sales Price across Manhattan for the month of December was $1,131,250, a 5.2% increase from last month. MEDIAN SALES PRICE: Key Takeaways By neighborhood, the median sales price for condos increased in Upper Manhattan, and decreased across all other neighborhoods. Condos in Downtown Manhattan are the most expensive. The median sales price for co-ops increased across all neighborhoods except for on the Upper East Side, which decreased by 7%, and in Upper Manhattan which had no change. Similar to Condos, Co-ops in Downtown Manhattan are the most expensive. Across bedroom counts, the median sales price for condos decreased within all sizes, and for co-ops, the median sales price decreased across all sizes except for 1-bedroom units. A more accurate and consistent representation of price appreciation is the Median Price per Square Foot [PPSF], which was $1,369 in November, a 1.0% increase from November. MEDIAN PPSF: Key Takeaways Median PPSF increased across all price points except for units between $1–2M, which decreased by 3%. Manhattan median price per square foot increased the most in the $5–10M price range by 10%, and the Median PPSF is $2,622. Upper Manhattan, Midtown, and Downtown Manhattan saw a decrease in median price per square foot this month, whereas the Upper East and West sides increased by 2% compared to last month. Over the last year, all bedroom sizes saw an increase in Median PPSF except for studio apartments, but compared to last month, 1 bedroom and 3+ bedroom units increased, by contrast studios and 2-bedrooms decreased. Median listing discounts in Manhattan Continue to Decline Median listing discounts continued to decrease in December and are currently 3.7%. MEDIAN LISTING DISCOUNT: Key Takeaways The median listing discount decreased for Condos and Co-ops, and increased for Townhouses in Manhattan compared to last month. The median listing discount is greatest for townhouses [11.8%]. The median listing discount decreased across the lower price points ($2M and below), and increased across the higher price points ($2M and above) compared to last month. Across all neighborhoods, the median listing discount decreased in all areas, except for in the Upper East Side, and Midtown which had no change. The median discount is highest for properties in Midtown [4.7%] and lowest for properties on the Upper West Side [2.2%] By bedroom size, the median listing discount decreased for 1 and 3+ bedroom units and increased for studios and 1-bedrooms compared to last month. 1-bedroom units are the most competitive. What this means for… Buyers: The market pulse is rising as supply has decreased, indicating increased competition amongst buyers for desirable properties. Buyers can look forward to new inventory coming on the market in the coming months and it’s important for buyers to get prepared now to be well positioned. The median sales price is rising and the median listing discount is decreasing. Mortgage interest rates are increasing once again, and are projected to increase throughout 2022, potentially spurring buyers to act sooner than later. Sellers: Sellers can realize the first mover advantage by listing sooner. While sellers often traditionally wait until late winter or early spring to list their home, with active buyers clamoring for new inventory, sellers can stand out by listing sooner. The Market Pulse is rising, indicating a strengthening seller’s market. Total supply has dipped back down below 5,000 and to a level last seen during this time of year in 2017. Renters: In the face of rising inflation and increased rent renewal rates, now can be an ideal time to consider buying rather than renting. Rental rates have increased faster than sale prices in the last year. 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 tenants, with apartments often receiving multiple offers and occasionally going to bidding wars. Investors: With attention on rising inflation, real estate offers a hedge against inflation. Rising rental rates are increasing cap rates and creating an incentive for investors to explore investment opportunities in Manhattan. Today presents an opportunity to purchase Manhattan real estate on an upswing. 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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