NYT: Manhattan Apartment Sales Surge to Three-Decade High

One benefit to reading The Lanyard Team’s newsletter each month is the ‘heard it here first’ factor. In this case, the NYT echoes the sentiment of our most recent newsletter. More apartments were sold in Manhattan in the third quarter than at any other time in the last 32 years, in the latest sign that New York City real estate is set for a faster-than-expected recovery, according to new market reports.

There were 4,523 closed sales of co-ops and condos in Manhattan in the third quarter, exceeding the record set in the middle of 2007, when 3,939 sales were recorded. The quarter ended with more than three times as many sales as in the same period in 2020, when the market was largely locked down because of the coronavirus, and with 76.5 percent more sales than the same time in 2019, before the pandemic. This is largely a result of pent up demand.

Market Update - October 2021

CONDO SALES SURGE

COOP SALES CONTINUE TO THRIVE

CONDO SIGNED CONTRACT

1-2M up 120% YOY (from Sept 20)
2-4M up 183% YOY
4-5M up 600% YOY
5-10M up 242% YOY

COOP SIGNED CONTRACTS

1-2M up 36% (from Sept 2020)
2-4M up 19%
4-5M up 250%
5-10M up 400%

NEW LISTINGS

Coops down 48% YOY
Condos down 37% YOY
Coops down 35% MOM (from Aug 2021)
Condos down 11% MOM

We stand by our projections and the fall market is indeed proving to be both healthy and tightening. Signed contracts in the condo sphere are up an average of 285% from Sept of last year. In the 2-4M condo range alone that translated to a total of 139 signed contracts—-that is a significant number. The coop market continues to thrive, with consistent increases in the 1-4M pricepoints but a whopping 250% jump in the 4-5M range—400% in the 5-10M Range.

Furthermore, an interesting metric to consider is that the amount of contracts signed for EVERY CATEGORY ABOVE was at least the same number of contracts (or slightly higher) than the prior month of August. This shows that the market is not just healthy, it is GATHERING SPEED. The fall market is indeed bringing with it higher pricing, faster absorption, and lesser discounts. We have witnessed this firsthand having experienced no fewer than 6 bidding wars over the last few weeks.

Lastly, inventory is shrinking. Both coop and condo inventory are down YOY, and even moreso both inventories are even down from just the prior month of August. Less Inventory + More Demand means sellers are gaining leverage as the Covid discounts dissipate.

The Great Florida Migration: Fact of Fiction?

What does the great Florida migration mean for me, a New York condo/coop owner?

Jean Denoyer, the owner of La Goulue, the clubby Upper East Side Madison Avenue mainstay, vocally declared “I have escaped New York!” when he proudly opened an outpost in Palm Beach. Any quick scan of recent headlines would reveal that scores of New Yorkers have fled to Miami and Palm Beach with little interest in returning. However, with vaccinations rolling out arguably ahead of schedule, this is likely to be more fluid.

Data from the US Postal Service shows that in 2020, 2,246 people filed permanent address changes from Manhattan to Miami-Dade County, and 1,741 folks changed from Manhattan to Palm Beach, comprising about 10% of all out-of-state moves from the borough. And the pandemic has prompted many big firms to consider leaving Wall Street for the Miami-to-West Palm Beach corridor, with recent announcements from Goldman Sachs and Paul Singer’s Elliot Management leading the charge. Carl Icahn and Ken Griffin’s Citadel followed suit. A year of working from home to avoid Covid-19 has led to many finance and investing companies (to say nothing about over-leased law firms) to conclude that they can cut back on ultra-pricey Manhattan office space without sacrificing revenue.

However, there are a few key pieces here that are important to understand. Florida home prices in both the city centers and the surrounding suburban environs (Boca Raton, Ft. Lauderdale, etc) have seen pricing surge as much as 30%, making the financial appeal of this area lose a bit of lustre each week.

And of course, a croque monsieur at La Goulue in Palm Beach is not accompanied by the theater, museums, restaurants, Lincoln Center, Carnegie Hall, and many other cultural havens whose opening may not be too far around the corner.

I think what this data really shows is how the pandemic expedited globalization. Every company and industry is rethinking structuring around in-office time as well as making permanent certain aspects of working from home—many firms toying with 2-3 days per week in v. 2-3 at home.

Miami has long been an adjunct for wealthy New Yorkers---now it just means there will be more fluidity of movement for those formerly-known-as-snowbirds. Maybe New York is not relocating to Florida, but merely expanding, like having a pied a terre where there’s always good weather and oh, yeah, the office rents are also dirt cheap.

Contracts Signed Report - February 2021

In deconstructing the data from February’s sales activity, I am struck by a few compelling data points which show where the market is most healthy...see below

• 60% of all condo contracts were at or below $3M, proving the luxury condo market is still depressed but the ‘prosaic’ condo market doing well

• 40% of all condo contracts were btwn $1-2M, which is a curiously limited bracket, meaning most condo buyers were buying smaller and older 2BRs OR newer, larger 1BRs

• the avg sales price for condos was $2.929M, up from $2.826M in Feb ‘20

• the avg sales price for coops was $1.452M, up from $1.226M in Feb ‘20

• only 14% of coop sales were at $2M and above, showing that there is still minimal movement within the larger ‘family’ apt demo

• the East side is beating out the West for transactions, comprising 29% of all contracts opposed to 20% for the West side

• the West side seems to be holding pricing more firmly than the East, but transacting less frequently, which is an unexpected shift

• Downtown sales comprised only 33% of contracts, whereas the remaining 67% across uptown/midtown are the bulk of what’s moving

• Brooklyn is thriving, with over twice as many contracts signed Feb ‘21 over prior year (both condo and coop)

• Condos $2M-4M in Brooklyn received 3x as many contracts YOY

• The single-family Townhouse market in Brooklyn is off the hook, with almost 5x as many signed contracts YOY with the sweetspot of $2-4M homes comprising 40% of all signed contracts

Anecdotally, our team is equally busy in both the condo and coop spheres but we notice the coop market moving more efficiently with lesser discounts off of last asking price. The condo deals on the buy side are more aggressive, but not as frequently as one might expect—many condo owners are still leasing their apts out, waiting for better markets. The Brooklyn market is obviously the one to jump into as the BK submarkets are among the few actually appreciating through the pandemic.

On the Ground Market Update - Oct 2020

The average price of apts which received signed contracts in October ‘20 was $1,170M for coops, $2,904M for condos

• YOY, average price of coops went UP from October ‘19 by 4.7%, whereas average price of condos went UP 27.8%

• Average discount in October was 10.3% from original price for coops, 11.9% for condos, both increased by over 30% from October ‘19