When in-person showings were banned in New York City to stop the spread of COVID-19, we knew the impact would be unprecedented.
But since we’ve re-opened, the City’s housing market has come back in a big way.
It seems like every time a crisis hits New York City we are bombarded with predictions that it will never recover. We were told that everyone was fleeing Manhattan and moving to the suburbs. But in just the past four months, activity has turned around to the point that deals in Manhattan and Brooklyn were higher in September than a year ago. No offense to the other boroughs, just focusing on these two for this piece.
Below is a comparison of contracts signed to buy
apartments, compared to the same month in 2019.
You’ll see that after bottoming out in May, when contracts were down 83% in Manhattan and 79% in Brooklyn, both boroughs had a double-digit increase in September. Brooklyn was also up 7% in August, way to go Brooklyn!
While this is very encouraging news, there are a few caveats that need mentioning. First, contract activity in the second half of 2019 was weaker than normal, as many buyers rushed to close before increased transfer and mansions taxes became effective July 1st. Second, we would expect to see a big jump in deals once in-person showings were allowed again in late June, from pent-up demand both before and after the pandemic started.
But if I had told you in May that contracts to buy apartments in Manhattan would be 27% higher in
September than the year before, you probably would have laughed at me.
The City still has very serious challenges ahead, most notably a huge budget gap and a resurgence of virus cases in certain areas. Our economic recovery is lagging the rest of the U.S., which is not surprising given the large number of virus cases here. Finally, there has been a surge of new listings placed on the market, which in July and August were double what they were last year. Prices will need to fall further in many parts of the city for this inventory to be absorbed.
The housing market has led the economic recovery in the U.S., with existing home prices hitting a record high last month and inventory at its lowest level in years. We are a long way from that, but we also had a much bigger hole to climb out of.
Keep the faith.
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