Elegran Insights: Weekly Manhattan & Brooklyn Market
Week of 1/30/23
For the past two non-holiday weeks, we’ve reported that demand for NYC has been significantly below its pre-pandemic* benchmark. Well, this week, the numbers are even worse.
It’s time to make a call. Was NYC dangerously overbought post-COVID and now heading into a drought, or, is there perhaps hope hidden somewhere in the numbers?
We’re going to bet on the latter and here’s why. Since mid-2022 and until very recently, demand was trending along its pre-pandemic average; i.e, it was behaving normally. And, we asked ourselves, “What is a pattern of normal markets?
Seasonality. We’re in the throes of winter and demand is notoriously low in winter. So, at least for now, demand isn’t weak, it’s seasonal. Just to convince ourselves, we looked back at each January from 2015–2020, comparing the average of those numbers to the past few weeks and, sure enough, we’re right on par with where we should be historically.
* the period 5 Jan 2015–1 March 2020
Manhattan Supply Reinforcing what we discussed last week, the chart below clearly illustrates the seasonality of supply. Annually, there are two defined peaks — one in Spring and the other in Fall — and two equally distinct troughs in Summer and Winter. Those peaks are nearly identical in magnitude and duration, as are the troughs. 2020; however, was atypical as sellers withheld supply as they anxiously observed the effect of COVID on consumerism, leaving a large void where there should have been a Spring surge. By July 2020; however, seller trepidation was replaced with a haste to list properties in an effort to satisfy the deluge of pent-up demand, creating the largest Fall supply spike on record. Having moved back into step with its historical cadence, NYC is currently bouncing off the Winter low and beginning its ascent towards the Spring peak. This week, supply increased to 6,035 residences for sale, including the 260 new listings that were posted.
Brooklyn Supply — Although skewed by the atypical nature of 2020, also exhibits the bi-annual cycle we described for the Manhattan market. As expected, supply is now off the Winter low en route to the Spring peak, and for sale units increased to 2,908 units, including 134 new listings.
Manhattan Pending Sales like supply, display a distinct seasonality with two crests and two troughs each year. As the below illustrates, 2020 jolted the system and we expect Manhattan is finding its historical pattern. Historically, the metric reaches its lowest level in February so, as expected, pending sales were down again this week to 2,176 units but should soon bottom and reverse course towards the June peak.
Brooklyn Pending Sales, Without a historical pattern to reference, we’ll assume pending sales in Brooklyn follow those same patterns that describe Manhattan. As such, the metric, down to 1,485 units this week, is approaching the seasonal February trough and will peak in June.
Manhattan Contracts Signed — During Q2–2022, rising mortgage rates quickly began letting air out of the overinflated demand balloon. During Q3–2022, demand passed below its pre-pandemic benchmark and there it has remained ever since. This week, the number of contracts signed, 112, was –43% lower than that historical average, but these are the seasonal Winter doldrums so that number is, at least partially, to be expected.
Brooklyn Contracts Signed — As it has done four times previously since recovering from the COVID-induced trough, demand for the borough appears to be retreating from its most recent peak and reverting to the pre-pandemic benchmark. The number of contracts signed this week, 72, was slightly above parity with that historical average. Whether demand for Brooklyn can surge again for a sixth time is yet to be seen.
New Development Insights
As reported by Marketproof, this week, 46 new development contracts were reported across 35 buildings. The following were the top selling new developments of the week:
- 208 Delancey Street(Lower East Side)
- 300 West 30 Street (Chelsea)
- The Georgian (Forest Hills)
Please contact me if you would like to learn more about these, or other new developments.
We will continue sharing the Elegran Insights data analysis with you every week.
Our goal is simple: to humanize the world of real estate. Michael Rossi founded Elegran in 2008 on the dual premise of motivation and innovation, with a third sustaining principle added over the years: care. Unique in the industry as an independently owned brokerage with agents known as “advisors” and a data-centered approach, the firm has become a key player in the New York brokerage world. The exclusive NYC member of the invitation-only Forbes Global Properties network, Elegran oversaw well over $500 million in sales volume in 2019, tripled market share in 2020 and sold US $1B in 2021.Headquartered in the center of Manhattan, Elegran is solely dedicated to serving the incomparable needs of the New York City metropolitan region. For more information about Elegran, visit www.elegran.com.