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As we enter the new year, we are taking a break from charts or statistical tracking to give you a more holistic recap of the 2020 market. For those of you that are more numerically inclined, fear not -- we'll be back with that sort of analysis in early February to recap market activity and data from the first full month of 2021.
Looking back, the first two months of 2020 were actually quite promising, with renewed activity that seemed poised to reverse the gradual market slowdown that had been ongoing since mid-2018. Then, just before the busy Spring market really got going, the world stopped. Covid effectively shut down all real estate activity in NYC from March 20 to June 28. Several things happened during "NY on Pause." First, virtually any deal that had an accepted offer in early March but had not yet been signed into contract either fell apart or, if the sellers were lucky, was re-negotiated. Deals that were in contract were at best delayed (with most of those closings taking place in June/July) and some buyers even chose to walk away from signed contracts, leaving behind their 10% deposits. Many buyers combed through their sale contracts to find seller defaults to re-negotiate their contracts. As for new deals, there were only a handful of contracts signed, most early on, which were negotiated at deep discounts as uncertainty loomed. With a moratorium on all in-person showings, the market was at a relative standstill. In the early days of the moratorium, with no clear picture of when activity would resume, speculation, uncertainty, and apocalyptic predictions abounded.
Even before in-person real estate activity was permitted to resume on June 28, things had begun to look up. The stock market had begun to climb, while NYC's Covid numbers were finally on the decline. In May and June, some new deals came together. Aside from a handful of outliers, a majority of contracts signed during this time were within 10% of asking price in Manhattan and within 5% in Brooklyn. New listings began to slowly enter the market in June, followed by a surge in the first few weeks of July when in-person showings were able to resume. Listing prices largely remained at pre-Covid levels, as sellers braced themselves for buyers expecting to negotiate. Contract activity picked up, but aside from a small number of new listings that were snatched up immediately, buyer demand lagged relative to the new wave of listings.
The Fall market saw more buyer activity -- showings, inquiries, interest -- but deals were slow to culminate, and new inventory continued to enter the market adding to a growing surplus. Some neighborhoods -- like Midtown -- were hit harder than others, with very little buyer activity even after drastic price cuts on most of the listings. In the deals that did come together, contract prices in Manhattan largely remained within 10% of ask, although some neighborhoods saw far less (or more) negotiability than others. While Brooklyn numbers seemed to track on paper, on the ground activity was less frenzied than in the past. With buyers taking a more cautious approach, days on market figures in Brooklyn had risen borough-wide by the end of the year.
Since the election and announcement of the initial vaccine distribution plans in November, the Manhattan market has regained some ground. By the end of the year, sellers and buyers seemed to be converging. While total number of closings were lower than in previous years, contract activity picked up and ultimately exceeded historical levels in the final months of 2020. Many properties that had been on the market for months suddenly saw an uptick in interest, with a few even receiving multiple offers, pushing sale prices closer to asking than anticipated.
By the end of the year, low rates and negotiability enticed many buyers who were sidelined into recognizing value, especially in the luxury sector which has seen a healthy rebound from a years-long slump. Those looking have flocked toward larger homes with the average square footage of 2020 sold listings up a whopping ~30% compared to 2019. At the end of the day, we have not seen the mass exodus out of the city that many predicted, although Covid did accelerate the move for many folks who were already considering it.
As we enter 2021, we are seeing a significant uptick in activity with our own buyers, and inventory levels remain low, with very few new listings entering the market since the start of the year. It remains to be seen how this dynamic will play out, or if it will continue as we get closer to the start of Spring. Currently, we expect the market to continue improving during 2021, although there are still deals to be had, especially for buyers looking in the areas of Manhattan that were hit the hardest during 2020.