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The coronavirus pandemic is effecting real estate in unprecedented ways and the ultimate impact on the New York City market is far from being known. As a quarterly synopsis based on closed sales, this report is by its nature a look in the “rear-view mirror” and is only minimally reflective of the shifts in business at the end of March.
What this report does show gives us some optimism: a rise in sales. First Quarter 2020 closed sales increased 2%. An uptick in activity that started in late 2019 continued in early 2020, and by mid-March closings and contracts signed were up 10% versus the same period in 2019. Lower pricing and record-low mortgage rates were unlocking pent-up demand. But then as the coronavirus pandemic spread, the stock market dropped sharply, nonessential businesses closed, and New York City became an epicenter of the virus, sales activity dropped precipitously. Yet despite these incredible challenges, business did not stop: prospective buyers continue to shop online, agents are conducting virtual appointments, new contracts are being signed, and over 130 deals have closed in the past two weeks.
There were just under 7,000 active listings in Manhattan as of mid-March, up just 2% from last year. Inventory growth, which slowed in late 2019, was minimal in January and February thanks to rising sales and fewer homes hitting the market versus a year ago. Then as the state’s stay-at-home order went into effect in late March, many sellers chose to take listings off the market. Inventory quickly fell to about 6,400 active listings, a 7% drop versus First Quarter 2019 and the lowest inventory figure since First Quarter 2018.
Prices fell again this quarter largely due to the effects of high supply, and fewer high-priced new development closings. The impact of coronavirus on pricing was likely minimal since most closings were for contracts signed prior to March. Nevertheless, for the first time in ten years, median price and average price per square foot declined together for a second consecutive quarter, falling annually 8% to $1.05M and 9% to $1,686, respectively, back to levels seen in 2015.
Following six consecutive quarters of sales decline, the Brooklyn market appeared to have rebounded with a 9% uptick in closing activity during First Quarter 2020. The year started off strong with January closings alone up 30% annually. However these statistics lag today’s reality. The last two weeks of the quarter experienced a near halt of real estate activity and the quarter ended with 20% fewer signed contracts compared to the first three months of 2019. Sellers changed course rapidly as social distancing measures were implemented, pulling their listings off the market and causing inventory levels to hit a seven-year low.
With such a strong start to 2020, closing figures may have been even higher if the momentum had continued. There was increased sales activity at nearly all price points except at the very low-end where inventory was the most constrained. All product types had increased sales but resale condo sales led the way with its largest annual gain in over three years.
Prices remained high and marketing time continued to expand. While not records, median and average price did increase year over-year. Shrinking market share of sales at the low-end and a rebound in sales at the high-end drove up price statistics. Buyer indecision drove days on market up by ten days, or 11% annually, the largest year-over-year increase in two years.