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Fall 2020 Market Recap

With the Fall market now behind us, two major trends have emerged. First, there continues to be the tale of two Manhattans, mostly dictated by location, with some properties going quickly and at pre-Covid prices and others that continue to languish on the market with little interest. Second, the narrative of Manhattan vs. Brooklyn has shifted. While early data painted the picture of a struggling Manhattan and resilient Brooklyn, contracts and closings since October 15th indicate that some areas of Manhattan are seeing a marked return of buyer interest.

In Brooklyn, which has been relatively more stable, there has also been a gradual uptick in days on market and price reductions/negotiability.

In Manhattan, total contracts signed from October 15th to December 15th was higher compared to the same time last year, a promising sign coupled with a rebound in number of closings, down just ~37% from 2019 levels since October 15th (compared to ~67% during the first 4 weeks of Fall). As a reminder, closings are a lagging indicator, so most closings in late Fall reflect deals that went into contract between July and September. Given the uptick in activity and contracts (especially since the election), we would expect the closings indicators to be even stronger in early 2021.

Downtown gained momentum throughout the Fall season, with declines in days on market, fewer price reductions, and faster absorption than any other Manhattan sub-market. Currently, downtown listings make up less than 30% of active inventory, yet made up 36.3% of closings and 32.3% of signed contracts between October - December 15th. The Upper East and Upper West Sides also saw a healthy uptick in closings compared to earlier in the season, as well as a modest decline in days on market. However, recent Upper East & West Side sales came at significantly greater discounts than earlier in the Fall, with median negotiability increasing from 2% below to 6.3% below last-asking.

The Midtown market remains the hardest hit by COVID, with significantly fewer closings, longer days on market, more price reductions, and greater negotiability than any other Manhattan sub-market. More than 42% of Midtown listings sold since October 15th reduced their asking prices before entering contract (by a median -9.1%), and still closed a median 4.3% below last-asking.

There has been much positive press about the Manhattan luxury market in recent weeks, which had been in decline since long before COVID. In the three weeks following Thanksgiving this year, more $4M+ contracts were signed than during the same period last year, indicating that some luxury buyers have been enticed back by low interest rates and further price reductions in the late Fall market.

In Brooklyn, negotiability, price reductions, and days on market have remained much lower than in any part of Manhattan, but these indicators have gotten weaker as the season has progressed. Since October 15th, days on market and % of listings with price reductions while actively listed increased for homes sold across all sub-markets compared to closings during the first 4 weeks of Fall. Notably, the % of homes sold in BoCoCa (Boerum Hill, Cobble Hill & Carroll Gardens) that reduced asking price before entering contract more than doubled, and homes in all sub-markets other than South Brooklyn saw at least a 10 day increase in median days on market. While the Brooklyn market remains much stronger than Manhattan overall, the urgency that fueled bidding wars and made over-ask sale prices the norm in much of Brooklyn has faded, and Brooklyn sellers have increasingly had to adjust pricing and expectations in order to engage buyers.

Looking ahead, the NYC sales market is traditionally quiet from mid-December through February, although it's hard to predict if this will remain true this year. Anecdotally, the momentum in buyer activity since the election has not yet ebbed, buoyed by optimism for the vaccines, low interest rates, and the perception that the worst for NYC real estate is already behind us.

Our current expectation is that, except for the 2-3 weeks right around the holidays, the market is likely to be far more active this Winter season than in previous years. While we expect activity to be strong, rebounding to pre-COVID (or peak) pricing will take some time as increased buyer confidence will likely be counterbalanced by an influx of new inventory this Spring.


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