The New York City market is typically bustling; however, there are two segments of real estate that have truly turned a corner as the economy recovers from COVID-19: apartment and luxury-home closings.
According to Brown Harris Steven’s second quarter Residential Market Report, activity within apartment closings has surpassed pre-COVID levels in some cases with 3,944 sales reported—more than double YoY.
This is happening across all price points, but is particularly significant in the resale categories for apartments priced over $5 million. In this area alone, closings are up 85% from the first quarter.
Much of the same is occurring in the luxury markets, with average resale prices up 21% from the first quarter, reaching the second-highest level ever recorded.
What’s driving this post-COVID rebound in apartment and luxury home closings?
According to Bess Freedman, CEO of Brown Harris Stevens and a 2021 RISMedia Real Estate Newsmaker, a return to “normalcy” has been key.
“As things open up, and vaccinations continue, consumer confidence is up and people want to spend,” Freedman tells RISMedia. “The pandemic really widened the wealth gap in many ways—while some people struggled to stay employed and in homes, others made more money than ever before.”
Competition is driving prices up—as with much of the country. According to the report, the average price for a new development was $3,055,471 million—4% higher than the first quarter. And luxury resale closings increased by 21% from the first quarter, posting a median price of $998.250.
“We are seeing that upcoming tax changes in New York coupled with the looming threat of heightened federal taxes on the wealthy have spurred spending sprees,” says Freedman. “NYC real estate has always been a safe bet for those looking to invest their money, and that has resulted in one of the best second quarters in Manhattan we’ve ever experienced.”
Where is the business primarily occurring?
The East Side takes the lead with 21% of resales, followed by Downtown South of 14th Street (21.3%), West Side (19.1%), Midtown (17.2%), Downtown 34th to 14th Street (12.9%) and Upper Manhattan (6.4%).
It will be interesting to see if shifting office trends will impact location preferences and prices in the future. According to the report, the Partnership for New York City found that 62% of Manhattan’s one million office workers are due back by September.
“I believe the NYC market is going to remain strong especially since the suburban and second-home market frenzy is not sustainable,” says Freedman. “Right now, we are in a buyer’s market in Manhattan, but the pendulum is starting to swing toward a more normal ebb and flow. Housing prices are up around the country even though rates are down, and this is a result of lack of supply and heightened demand.”
“The dynamic will balance out eventually, but it will take time,” adds Freedman. “The bottom line is, New York City has always been desirable and will continue to be desirable. It’s the greatest city in the world and that won’t change.”
To read the full report, click here.
Liz Dominguez is RISMedia’s senior online editor. Email her your real estate news ideas to lizd@rismedia.com.
