Manhattan’s property market in post-lockdown rebound

When Australian physician Weng Yee Chin and her husband came to buy a Manhattan apartment in 2019 before moving from Hong Kong, they were “traumatised” by the experience and rented instead. Armed with pandemic savings, they started looking again at the start of the year. They may have been enthused by the lower prices — but that didn’t make the process easy, exactly.

“I feel that there was a lot of value, compared to 2019,” says Chin. The couple made three different offers at the start of 2021. But all of them failed.

“There were a lot of bargains to be had if you were lucky and if you moved on it at the right time and [were] willing to compromise,” she says. But competition was hotting up. By the time they found the apartment they bought on the Upper East Side, the market had clearly shifted, and they were forced to increase their budget. In the end, the pair paid $3.7m for a three-bedroom condo on the 30th floor of a building on East 90th Street, with plenty of room for their two daughters and two dogs.

But Chin is “keeping a very close eye” on the market these days, she says, wondering: “how much did I overpay?”

For the past few months, the Manhattan property market has seen a rebound that few expected so quickly given how deserted the island felt at the start of the pandemic. Property portal StreetEasy reported 4,997 sales in the second quarter of 2021, the highest since its records started in 2010.

“Since April, I don’t think we’ve ever done this many transactions in such a tight period of time,” says Jeff Adler, a broker with Douglas Elliman.

Demand in the rental sector is up, too. “July [2021] was when we really started to see rents start to return to almost pre-pandemic levels for several neighbourhoods,” says Nancy Wu, an economist at StreetEasy.

Olivia Anne, who declined to give her surname, and her partner, decamped to upstate New York for much of the pandemic, letting the lease on their one-bedroom apartment in Chelsea lapse in February. When the couple looked to return to the city this year, they were hoping to find a bargain. In the summer, they put their apartment search on hold until the rental market cools down.

Column chart of Contracts signed (#) showing Agreed sales in Manhattan hit highest level in years

“It was just under $4,000 [per month] that we were paying in the end. Now I think the one-bedroom in [our old] building is over $5,000,” she says.

Douglas Elliman broker Marie Espinal says that some of her customers are renters opting to buy rather than pay such high rents.

In the sales market, Wu says the current rebound is a clear contrast from what was happening pre-pandemic, when prices were falling month after month since 2018. According to Douglas Elliman, the median property price in Manhattan in the second quarter of 2021 was $1.13m, the highest level in eight quarters, and up 5 per cent on the first quarter.

Wu cites the city’s reopening, low mortgage rates, and a greater certainty about where people will be working from as the “perfect storm” fuelling this new demand, particularly for those “who’ve been window shopping for the past year during the pandemic”.

Residential and commercial buildings in the Midtown neighborhood of New York — A view across the city to Midtown and the towers on ‘Billionaires’ Row’ © Jeenah Moon/Bloomberg

Overall, home prices have skyrocketed across the country as Americans have scooped up homes in suburban areas and smaller cities such as Austin and Phoenix. In May, property prices in the US were up nearly 17 per cent on the year before, according to the S&P CoreLogic Case-Shiller index — the biggest jump in more than 30 years of data. Prices have risen more slowly in Manhattan, says Wu, because of a surplus of homes on the market.

Despite recent rises, the median price in Manhattan is still below the levels seen four years ago, says Garrett Derderian, director of market intelligence at Serhant. In the second quarter of 2017, the median sales price peaked at $1.2m, he adds.

Throughout the market, so-called “Covid discounts” are slowly disappearing. Chase Landow, a Serhant broker, says a buyer purchased apartment 62B at 157 West 57th Street — otherwise known as “Billionaires’ Row” — for $16.5m in February 2021, below the apartment’s final asking price of $19.9m. A month later, apartment 66B went into contract at $19m.

Since the beginning of June, 12 apartments at the building have sold, whereas the preceding 12 took six months to sell, according to StreetEasy.

People wearing masks play softball on the Great lawn in Central Park — Central Park. One apartment on Central Park West failed to sell at $12.95m before the pandemic but was sold in August for $13.11m after multiple bids © Alexi Rosenfeld/Getty Images

Deanna Kory, a broker with Corcoran Group, represented the owner of an apartment at 115 Central Park West that was listed prior to the pandemic for $12.95m but failed to sell. It was relisted in April 2021 for $10.95m and closed on August 4 for $13.11m after competition among potential buyers.

“I have never lost out on more bidding wars in my entire career as I have in the last six months,” Landow says.

One area of Manhattan that remains depressed is Midtown East, says Serhant broker Donna Strugatz. The neighbourhood, which is home to a lot of commercial buildings and luxury condos, could continue to lag behind the rest of the island as more companies delay their return to office on account of the Covid-19 Delta variant.

Like buyers across the country, many New Yorkers are seeking more space, particularly for a home office.

Line chart of Median monthly rental asking price ($) showing New York City rental prices are rising again

Douglas Elliman broker Jacqueline Teplitzky said her clients are even paying attention to kitchens, long neglected by New Yorkers, as they pursue newfound passions for cooking. “Covid really told us this apartment is not big enough, not when both [my husband and I] were working at home and my son was working at home,” says Jennifer Tsao, who closed two weeks ago on a three-bedroom apartment on West End Avenue for $2.65m — $100,000 less than its asking price. Tsao still felt pressure from the market though, she says, moving quickly so no one else would swoop in and offer more.

“If this one hadn’t come up, I don’t know if we’d still be looking,” she says.

“I think the rebound we’ve been seeing since the beginning of the year is heavily correlated with vaccine adoption,” says Jonathan Miller, chief executive of real estate appraisal company Miller Samuel.

While the third quarter could outpace the second, he adds, the proliferation of the Delta variant might delay some buyers’ plans.

What you can buy for

$600,000 A one-bedroom, co-op apartment on MacDougal St in SoHo. Maintenance is $796 per month. Available through Sotheby’s International Realty.

$3.01m A two-bedroom condo apartment on East 30th Street in NoMad, Midtown Manhattan. The apartment, which measures 1,371 sq ft, has monthly maintenance fees of $1,914. Available through Douglas Elliman.