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2022 Q1 Market Update

In Manhattan, the buying spree continued into Q1, likely fueled by escalating rents, a desire for more space, impending interest rate increases, and the continued return of pied-a-terre buyers (including foreign buyers). Borough-wide, condo and coop sales were 35.8% higher year-over-year, a Q1 record, reaching over $7B in total sales volume. Discounts also continued to fall, down to 5% from 6% in Q4 2021 and 10% in Q1 2021.

Median and average sale prices were up substantially year-over-year (14.6% and 24.9%, respectively) and also compared to the last quarter. For the first time since 2017, average sale prices surpassed the $2M mark, driven largely by condo sales which were up 47.3% year-over-year. The data shows buyers are buying larger apartments and also paying more per square foot.

Overall, demand throughout Manhattan remained high, and inventory was tight, down 17.2% year-over-year. One exception was Upper Manhattan, where inventory increased by 16.6% compared to Q4 and 9.6% compared to this time last year and signed contracts actually declined. Other parts of the city were sales hotspots; Downtown captured 29.5% of all sales, maintaining its dominant market share position, while interest in the Upper East and Upper West Sides also reached record levels. The Upper East Side captured 19% of all sales (the second highest of any submarket), while the Upper West saw more transactions than any past Q1 ever – 18.4% of all sales this quarter – representing a 16.5% year-over-year increase.

In Brooklyn, strong demand coupled with very limited inventory – a combination we’ve grown accustomed to – again resulted in higher sale prices and correlated market forces (fewer days on market and almost no discounts/ negotiability). Anecdotally, our Brooklyn buyers have been involved in bidding wars across almost all price points and product types this quarter (1-bedrooms to townhomes), and the market shows no signs of slowing. The average sale price hit $1.18M in Q1, the highest ever for a Q1 in Brooklyn, and a massive increase year-over-year. Active inventory in Brooklyn was down 6% year-over-year and 3% vs. Q4 of 2021 and even more (in the double digits) for coop and condos, specifically.

Looking specifically at Northwest Brooklyn – which includes Brooklyn Heights, BoCoCa, Park Slope, Clinton Hill, Fort Greene, Prospect Heights, DTBK, DUMBO, Greenwood Heights, Gowanus and Windsor Terrace – condos made up an outsized share of transactions this quarter, and median prices increased a whopping 15.7% vs. last quarter and 20.8% year-over-year. While the number of coops sales were down from Q4, median and average sale prices were up, albeit modestly. We believe that the decrease in coop sales volume is simply due to supply imbalance and not a shift in buyer preference for condos, which seems to be the case in Manhattan.

The strong Q1 market indicators across both Manhattan and Brooklyn come as no surprise, and any decreases from Q4 are likely attributable to seasonality rather than market forces. Supply continued to be extremely limited this quarter, so we expect the upward trend in prices and accompanying decreases in negotiability/days on market to be even more pronounced in Q2 (when Q1 contracts close.)

Whether we have plateaued or these increases will continue past the first half of 2022 will depend on a combination of whether supply remains at these historically low levels and whether buyer demand will remain in the market despite the challenging market conditions. While rising interest rates and conflict abroad have thus far not seemed to curb the momentum in the NYC market (possibly due to increased liquidity from well-timed investments in the stock market in recent years and strong Wall Street bonuses), it is hard to predict how these factors will evolve and at what point they might curb the market. The midterm elections may also play a role in the Fall as political uncertainty generally translates to a short-term decrease in transactions, but for Q2 we expect all market indicators will remain strong.


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