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As anticipated, new listings surged in July with pent-up supply intended for Spring finally coming on the market once NYC entered Phase 2. Buyer activity has resumed and has varied dramatically depending on location and price point, with Brooklyn outperforming Manhattan across all price points. Listing prices continue to largely hold at pre-COVID levels in both boroughs, although we are starting to see some price reductions now, and we expect adjustments after Labor Day for listings that have not entered contract by the end of August.
In Manhattan, new listings were up 72% in July compared to last year; however, year-to-date new listings are still lower than historic levels. While supply is down, demand has lagged further with the number of contracts signed this July 40% lower than last year. Even contract activity for homes priced below $1M, almost half of all contracts signed in Manhattan last month, was 37% lower this year than last. July contract activity in the $1-2M market lagged further, with 45% fewer contracts signed compared to 2019, even though there were 87% more homes in this price category listed this July versus last. On the higher-end ($2M+), signed contracts were down 40% this July compared to last, but inventory in this market was dramatically lower this year. One reason for this might be that sellers are holding back on listing new properties over the Summer on the belief that luxury buyers are firmly ensconced outside the city at this time.
There is no clear data on where contracts are currently being signed relative to asking price, but this information should begin trickling in via closings taking place over the next few months. What we have seen so far suggests that accepted offers in Manhattan are generally within 10% of asking price, but there are outliers especially in the higher-end of the market where negotiability has been much greater. A Compass survey of median negotiability (the negotiated price compared to asking price) for the first half of July suggests that negotiated prices were within 7% of asking on average, while rejected/unsuccessful offers were more than 10% below asking. A more recent Compass survey of contracts signed between June 22 – August 3 also indicates that an overwhelming majority of contract activity (84% of contract signed) were for homes priced below $2M which entered contract within 3.8% of the last asking price. There is very little data for homes over $2M, and these data points range from at-ask to 16% below.
As for closings, unsurprisingly, there were half as many closings this July in Manhattan compared to last. Closed sale prices reported thus far are essentially unchanged from last year, and in both years, sale prices were on average 11% below asking, suggesting that buyers expecting negotiability in Manhattan is nothing new. Accurate and competitive pricing remains key as supply is expected to continue to outpace demand, especially considering the higher-priced properties that are poised to enter the market in the Fall. While listing prices have held at pre-COVID levels thus far, there may be an adjustment in the Fall when new listings come on and closing data becomes available.
By contrast, Brooklyn’s market has seen a more robust rebound. New listings last month were up 43% versus July 2019, with listing prices virtually unchanged from pre-COVID levels. The most recent Compass negotiability survey reports almost two times as many offers made in Brooklyn than in Manhattan during the first half of July, with bidding wars reported on well-positioned properties. From a survey of offers that were successfully negotiated or accepted July 1-15, negotiated offers were largely within 1-3.9% of asking prices; on a more recent Compass survey of contracts signed between June 22 - August 3, negotiability was virtually nonexistent with Brooklyn homes entering contract on average at less than 1% below asking with more than 60% of contracts reported to be at or above asking. There were less than half the number of closings in Brooklyn this July versus last, and the median sale price was down 4%. As closings are a lagging indicator, the latest closed sale figures are starting to reflect contract activity (or re-negotiations) that took place during the shutdown, at the peak of the pandemic.
While there has been much talk of an exodus out of NYC for (literally) greener pastures, it is not the case, in my opinion, that COVID is driving New Yorkers out in droves. Anecdotally, all of my pre-COVID buyers are either actively looking in NYC again or they plan to resume their searches in the Fall. That said, surrounding markets have been booming, but much of that demand can be attributed to second-home buyers and folks who simply accelerated their longer-term plans to move out of the city. For some, COVID has made “just a plane flight away” from their families seem too far and it has pushed those to relocate which may bring many New Yorkers back to the city.
There are many factors at play in what is going on in the market now and it will continue to be unpredictable for the near future, but I hope this report provides some assurance that despite everything, the market continues to be resilient.
See below for Compass listings that have come on the market since Phase 2 and already are in contract. Properties that offer something of value or a unique look that are priced right still go fast in this market.
