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Judging from the last quarter of 2020, the New York luxury real estate market is expected to enter 2021 with confidence.
Sales of homes costing over $ 4 million have beena little abovethose for the same three months in 2019, says Donna Olshan, president of luxury real estate broker Olshan Realty. “Now part of it has to do with a demand that has never been met, because we lost the most important quarter, the spring,” she says.
But the tick on the rise is also, she said, “because most of those sales are [to] New Yorkers, or the New York metro area, are betting on the home team. They’re getting discounts on COVID-19, they’re looking at New York’s long-term prospects, and they’re buying. “
As the city looks to the next year, the known unknowns matter. The timing of vaccine deployments is opaque. A proposalpied-à-terre tax, feared by everyone in the industry, remains possible. And the economic future of the city, the country and the world is on hold.
But the city’s luxury residential market has enough momentum that pundits are comfortable making conditional predictions.
The suburban mania is over
“The way I think of the suburbs is they’ve had their moment,” says Jonathan Miller, president and CEO of Miller Samuel Assessors, who adds, “The tale of ‘running away from the city’ is already extremely dated. “
While sales in the suburbs are still on the rise year on year, “it’s no longer a growth spur,” he says. “And the price hike, largely caused by what I would call panic buying – where people left town out of fear – that was loaded upstream, and I don’t see a compelling reason for that.” [price growth] can be sustainable. “
John Walkup, COO and co-founder ofUrbanDigs, agrees. He says moving to the suburbs this year was really part of an old trend. “We were in the third year of this move to the suburbs picking up demand, relative to New York City,” Walkup says.
The hysterical exodus this spring to the suburbs of New York was “a little lightning,” Walkup continues. “Prices and transactions have skyrocketed.”
Brooklyn will stay hot
“The houses were on fire,” says Olshan. “Brooklyn townhouses have performed very well during the pandemic.”
The median fourth-quarter luxury home sales price in Brooklyn is expected to rise 5.5% year-on-year, according to UrbanDigs data. (“Luxury” in Brooklyn is defined by UrbanDigs to be over $ 2 million.) Signed contracts are up 26.2% for the same period, and days on the market are down nearly half. .
Overall, despite the non-existent spring sale season, the median luxury retail price in Brooklyn this year, according to UrbanDigs, was only down 1.5% from last year. The number of contracts signed will only drop by about 12% year over year, according to company data.
“A lot of it has to do with the lower price,” says Walkup. “A million dollars buys you a little more space, or Zoom room, and once you get into that luxury sector, that value goes up a bit. “
Demand shows no signs of slowing down.
“Brooklyn is certainly speeding up,” says Walkup, “and I see no reason for this to stop.”
Foreign buyers will stay away
“Foreign buyers are a bit of a straw man because sometimes they’re blamed for the ups, and sometimes they’re blamed for the downs,” says Walkup.
Yet many luxury buildings – especially the condominiums along the stretch of W. 57th Street known as ‘Billionaires Row’ – “were primarily positioned for the overseas market, and this is where the oversupply. is at its maximum, ”says Olshan.
“Unless thevaccine deploymentis very, very successful, we won’t see the overseas market come back ”for at least the first half of next year, she adds.
Manhattan will still have too many bad things
The new luxury condominium market “is overwhelmed by a huge supply,” Miller says.
“In 2020, we had 8.7 years of liquidation, which means it would take 8.7 years to sell all of Manhattan’s new unsold condos,” he says. This is expected to drop to 7.2 years in 2021, as there is an “expected decline in new products entering the market,” Miller says. Plus, additional sales will occur as buyers are drawn to reduced prices, he says.
“I think in 2021 we will see a continued decline in price trends,” he says.
… And that means big discounts
That’s a nice way to say that there might be some serious business to be found. The only question is in which buildings.
“The problem with developers is that they are being held hostage by the bank or their lenders,” Olshan explains. This means that a developer can’t settle for price on a whim. It’s a negotiation. Whichever building sorts their discounts first, they could have the upper hand.
“These things take a long time and you know the buyers are going where the next project is. If you don’t lower your price, they’ll move on. It’s as simple as that.
The next few months, says Olshan, “will be remembered as the optimal time to come out and strike a deal.”
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