Elegran Manhattan Market Update: December 2021
Manhattan Market Update
As we enter the holiday season, Manhattan inventory is down more than 10% while contract activity is up 3% compared to last month. Despite a relatively large influx of new supply in November, total supply decreased below 6,000 for the first time since Labor Day as the new supply failed to keep pace with rising demand. Manhattan has been experiencing a net-deficit of supply for an extended period of time and while declining supply is typical for November, it’s not the norm for more contracts to be signed in November compared to October. Throughout November, each week saw fewer new listings come to market. Additionally, with the exception of Thanksgiving week, more than 300 contracts were signed each week in November, something that has not happened since June. Taken together, competition amongst buyers is increasing in the Manhattan market and the Market Pulse has increased nearly 14% in the last month to 0.74, indicating a continued seller’s market. Median listing discounts are continuing to decrease and the median price per square foot increased nearly 2% in the last month. Based on seasonal trends, buyers should not expect a wave of new inventory until late January 2022. In the meantime, sellers may be able to capitalize on the current strong demand by listing during the holidays to garner the attention of buyers clamoring for new inventory.
Supply decreased 10.5% from last month, breaking below 6,000 to 5,878 listings on the market. Comparatively, at the end of November 2020 there were 8,769 units available for sale, nearly 3,000 more than today’s levels.
Monthly new supply: Of the last ten Novembers, November 2021 had the second highest new supply come to market. There were 1,156 new listings, second to November 2018 (1,267 new listings).
Total supply: Total Manhattan supply in November ranks fourth when compared to the last decade. Although supply is still technically at a high level, November 2021 presented a dramatic drop in inventory compared to 2020. Manhattan real estate has continued its recovery since then, and supply is regressing to seasonal norms.
Note: “Total Supply” refers to the amount of inventory on the market at a given time. “New Supply” or “New-to-Market” refers to the amount of new inventory that came on the market in a specific time period.
INVENTORY: Key Takeaways
- Manhattan supply decreased across all price ranges, neighborhoods, and bedroom counts over the last month and year, with the exception of listings priced $10M and higher, which increased by 3% compared to last month.
- Inventory decreased double digits across all price points below $5M and inventory priced $5–10M decreased only 2% in the last month.
- Inventory in Downtown Manhattan decreased 15%, and inventory on the Upper East Side decreased 8% in the last month.
Manhattan Buyer Activity as measured by signed contracts, continued to set a decade high for the month of November with 1,331 contracts signed. Contract activity has not been this high in the last decade. Contrary to last month, the number of contracts signed in November outpaced monthly new supply by 155. There were 475 more contracts signed this month than last year in November 2020, a 57% increase. An increase in contract activity is indicative of a continued uptick of buyer activity and renewed confidence in the recovering New York City real estate market and New York City in general.
CONTRACT ACTIVITY: Key Takeaways
- Buyers are active across a wide range of market segments indicated by increasing contract activity over the last month in most price ranges, neighborhoods and sizes.
- Apartments in the $1–2M price range had the greatest amount of contracts signed , followed by apartments in the $600K-1M price range .
- Contract volume in Midtown increased the most by 13%, and the number of listings signed  surpassed all of the other neighborhoods.
- In terms of bedroom count, more contracts were signed for 1-bedroom apartments than any other size.
Manhattan’s Market Pulse [a ratio between pending sales and supply] increased by 13.8% this month to 0.74, indicating a strengthening seller’s market and a closing of the brief window of opportunity for buyers seen in September and October.
After a brief retraction in September and October, the Market Pulse is rising as contract activity is accelerating and supply is dwindling. This rise in Market Pulse indicates that supply is falling faster than pending sales, and contract activity is accelerating, indicating it is a favorable time for a seller to come to market. Manhattan remains firmly a seller’s market, and the market has seen tremendous growth in buyer activity as NYC returns to a strong, healthy and liquid real estate market. In essence, the higher the market pulse, the less leverage for the buyer and the more leverage for the seller.
A Market Pulse below 0.4 is considered a buyer’s market, a Market Pulse between 0.4 and 0.6 is considered a neutral market and a Market Pulse above 0.6 is considered a seller’s market.] In a seller’s market, sellers often have more leverage than buyers because demand is greater than supply, resulting in apartments selling quickly, fewer discounts and increased bidding wars.
Pricing & Discounts
The Median Sales Price across Manhattan for the month of September was $1,074,990, a 4.1% decrease from last month.
MEDIAN SALES PRICE: Key Takeaways
- By neighborhood, the median sales price for condos increased on the Upper East Side, the Upper West Side, and Downtown markets, while decreasing in Upper Manhattan and Midtown. The Downtown market remains the most expensive.
- The median sales price for co-ops increased across all neighborhoods except for Downtown Manhattan. Co-ops on the Upper West side are the most expensive.
- Across bedroom count, the median sales price for condos decreased within all sizes except for studios, and for co-ops, the median sales price remained unchanged for studios while increasing in 1-bedroom apartments and decreased in 2–3+ bedroom units.
A more accurate and consistent representation of price appreciation is the Median Price per Square Foot [PPSF], which was $1,355 in November, a 1.9% increase from October.
MEDIAN PPSF: Key Takeaways
- Median PPSF increased the most in the $5–10M price range, and decreased the most in the $10M and up price point.
- By neighborhood, the median price per square foot increased across all areas except for in Midtown Manhattan [-7%].
- Over the last year, all bedroom sizes saw an increase in Median PPSF, but compared to last month, 1–2 bedroom apartments decreased by 3%, whereas studios and 3+ bedrooms increased by 2% and 3% respectively.
Median listing discounts in Manhattan Continue to Decline
Median listing discounts continued to decrease in November and is currently 3.6%, down 7.7% from last month.
MEDIAN LISTING DISCOUNT: Key Takeaways
- The median listing discount decreased across all apartment types both month over month and year over year.
- The median listing discount decreased across all price points except for the $600k-1M price range, which increased by 4%.
- Across all neighborhoods, the median listing discount decreased in all areas, except for Downtown Manhattan which increased 3%.
- The median discount is highest for properties in Midtown [4.7%] and lowest for properties in the Upper West Side [2.3%]
- By bedroom size, the median listing discount decreased across the board compared to last month and year.
What this means for…
- Buyers awaiting more inventory may be disappointed as weekly new inventory continues to trend lower and is compounded by a steady increase in contract activity throughout November.
- Contract activity continues to set decade records in November indicating the demand for inventory and the competition among buyers.
- November’s increase of pending sales at a faster rate than supply has raised the Market Pulse is closing the window of opportunity for buyers.
- Median listing discounts continue to decrease and the percentage of listings that sell over the asking price is increasing, indicative of continued competition for desirable and accurately-priced properties.
- Mortgage interest rates are beginning to increase once again, and are projected to increase throughout 2022, potentially spurring buyers to act sooner than later.
- While sellers often traditionally wait until late winter or early spring to list their home, buyers are active and clamoring for new inventory, and sellers can stand out by listing sooner.
- The Market Pulse is rising, indicating a strengthening seller’s market.
- Total supply has dipped back down below 5,000 and to a level last seen during this time of year in 2017.
- Sellers on the market who are not receiving attention or offers should reevaluate their asking price heading into the holiday season, as bidding wars are increasingly common and the median days on market is declining.
- Supply continues to decline as tenants are often choosing to renew their leases rather than move.
- Tenants facing a renewal may experience rising renewal rates and landlords unwilling to negotiate or offer concessions.
- There are nearly 10,000 fewer units available for rent now, compared to this time last year as currently supply is only 23% of the supply on the market 1-year ago.
- Competition is fierce amongst tenants, with apartments often receiving multiple offers and occasionally going to bidding wars.
- With attention on inflation, investors can look to hard assets as a hedge against inflation.
- Rising rental rates are increasing cap rates and creating incentive for investors to explore investment opportunities in Manhattan.
- Today presents an opportunity to purchase Manhattan real estate on an upswing and at prices still below their recent highs.
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