All the Stars are Aligned, Why Now is a Great Time to Buy in NYC
The real estate market in Manhattan over the past few years has been more favorable to buyers especially during the past pandemic year. Since January however, there has been a steady stream of good news proving New York City’s resiliency and causing many to feel that sales prices will begin to rise and could shift the leverage back to sellers. The just-released Second Quarter numbers further strengthened the overall positive reports. Manhattan had the best spring season for closed sales in six years and the strongest second quarter for contract activity since 2007. The number of Manhattan signed contracts has been climbing since last September and rose nearly sevenfold versus last spring’s “pause” from 700 to almost 5,000 contracts. As many buyers remain focused on the desire for more space, the high-end of the market performed well with increases in the sales of larger homes (3 bedrooms or more). Due to improved sales in this category, pricing statistics climbed versus last quarter, giving the $5M+ market a nice boost.
But even with incredibly strong sales, inventory remains stubbornly high. As of mid-June, 7,939 units were actively listed in Manhattan, 31% more than last year, although inventory then was artificially low due to pandemic-related showing restrictions. Inventory did moderate, albeit slightly, versus 1Q 2021—the first time since 2013 that inventory fell between the first and second quarter of the year.
The combination of pent-up demand, historically low interest rates, increased negotiability and consumer confidence have boosted sales over the first half of the year. The optimism has only grown since more and more New Yorkers have been vaccinated and the city has re-opened. Those with kids know for certain that schools will be open in the fall, which is what everyone has waited for over the past year. That said, the most significant factor in the market rebound has been lower prices, but the high level of activity in the Second Quarter indicates buyers understand that window is closing.
Window of Opportunity
By all accounts, we do expect a strong fall market. The economy is improving and will likely continue to improve. While it is nearly impossible to time the real estate market, we feel there is a rare window of opportunity right now to purchase property in NYC. Inventory is still high, offering buyers leverage on homes, especially those that are un-renovated or specifically renovated which may not appeal to all buyers. Interest rates are still low and will likely rise moderately before the end of the year. There is still negotiability and reduced or non-peak prices on many homes. Not every segment of the market is active with properly priced properties flying off the shelf. There are certain locations not considered ‘prime’ or apartment categories that have continued to suffer losses without much of a recovery. New development concessions have begun to wane and will likely be eliminated as we enter the fall market. Lastly, with buyers returning from their summer away, especially in the high-end, and foreign buyers re-entering the market, competition could increase as the year progresses.
Now more than ever it is important to have an excellent, experienced broker representing you in your purchase. If you would like to discuss your goals and options this summer, we would be happy to help.