February Market Update
The real estate market had its strongest February in many years, with Manhattan sales leading the charge and even the decimated rental market gaining some ground.
Much like its meteoric decline at the peak of Covid, the Manhattan market's recovery since the start of 2021 has been swift. February signed contract volume jumped by nearly 160% compared to September 2020, and was up 24% compared to just one month before. This sudden uptick in buyer activity in Manhattan ushered in increased absorption (with total inventory declining 4%), decreasing discounts, and the return of the bidding war, especially in Downtown listings priced <$2M. While February’s average and median sale price and PPSF figures were still slightly lower than early 2020 figures, there is a growing consensus that the Covid discount era in Manhattan is firmly over as the average discount from asking prices has shrunk to below pre-Covid levels. As the market heated up, many sellers were spurred into listing ahead of the traditional "Spring" market with new inventory in February up compared to historical levels.
A combination of factors may have contributed to the recent rebound, including continued low interest rates, renewed optimism following vaccine news, federal financial aid earmarked for NYC, and the impending change in administration at Gracie Mansion. The recent v-shape recovery in the stock market and increased savings during the lockdowns has also grown the net worth of many would-be buyers.
Across the river in Brooklyn, contract activity also increased in February, albeit less dramatically than in Manhattan. Contract volume grew by 9% compared to January, and was up 6% compared to February 2020, while average days on market decreased by ~3%. Discounts in Brooklyn remained few and far between, as the borough-wide average discount dropped to just 5% for homes sold in February, representing a 4% decline from January, and a 2% decline from last February (pre-Covid). Unlike in Manhattan, Brooklyn prices increased in February, with average and median prices up 4-5% from January, and up by double digits (~17%) compared to this time last year.
New inventory levels in Brooklyn have been exceptionally low this year, and overall inventory declined another 4% between January and February, leaving many Brooklyn buyers waiting for the influx of new listings this Spring.