NYC apartment buyers emerge from 'coma' to drive record sales

New York

MANHATTAN apartment sales had their biggest gain on record, driven by opportunity-seekers sniffing bargains in a borough that is still recovering from the Covid-19 lockdown.

In the second quarter, transactions surged 152 per cent from a year earlier, the biggest annual increase in data going back to 1990, said a report last Friday by appraiser Miller Samuel and brokerage Douglas Elliman Real Estate.

Also a record was the proportion of deals completed below the seller's asking price, at 92 per cent. That was the biggest share since the firms started tracking the metric in 2008.

"New York is coming out of its coma," said Scott Durkin, president of Douglas Elliman. "People who left New York and found primary homes out of the city, they have come back and said: 'OK, the dust has settled. Let's figure this out.'"

Plummeting infection rates and reopenings of restaurants and cultural venues have lured back city residents who decamped to the suburbs last year. They are returning to a market that is still heavy on property listings, while mortgage rates are near record lows, making this an opportune time to strike a deal for a place they can afford.

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For now, with the return to offices still just a trickle, there is less competition. That may change in the coming quarters, when more workers tire of commuting from the suburbs.

"We're going to see a compression of that Covid discount," said Jonathan Miller, president of Miller Samuel.

Buyers in the quarter preferred bigger apartments. The average size of units that changed hands was 115 square metres - the second-largest since 2015. That helped push the median sale price for all deals up 13 per cent to US$1.13 million, the highest in eight quarters, Miller Samuel and Douglas Elliman said.

"People throughout the city think differently now about their lives," Frederick Warburg Peters, chief executive officer of Warburg Realty, wrote in a separate report recently.

"They anticipate spending less time in the office, so space at home, both inside and out, has grown in importance."

The biggest discounts in the quarter could be found in lower Manhattan and the Upper East Side, said a report last Friday by the brokerage Serhant. Condo buyers in those areas got listing discounts averaging 12 per cent.

Buyer interest is still flowing. The number of contracts signed in the quarter - a better real-time gauge of demand - soared 619 per cent year over year to a record 4,633 transactions, Serhant's report said. It was the greatest number of deals in a single quarter since at least 2008.

The demand is likely to continue as foreign buyers, largely absent for over a year, eventually return, said Garrett Derderian, Serhant's director of market intelligence. BLOOMBERG