Manhattan Buyers Shun Fixer-Uppers

Manhattan buyers shun fixer-uppers— As prices of newly renovated apartments skyrocket, the market for unrenovated units has stagnated. The latest trend to emerge from the pandemic is a preference for renovated homes over budget-friendly fixer-uppers among Manhattan buyers, a new report indicates. Real estate data firm UrbanDigs found that the gap in sales prices between fresh-faced apartments and those requiring work has widened by nearly 30 percent in the last year, the second-largest such divide in a decade.

As demand for units in mint, move-in condition pushed prices to new highs — up nearly 14 percent to $1.25 million from a pandemic low of $1.1 million — sales prices for unrenovated apartments, such as estate sale units, have stagnated. During the same period, the cost of a fixer-upper rose just over 1 percent.

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.

POST COVID: WHERE ARE THE DEALS AND WHERE CAN SELLERS YIELD PROFITS?

Which neighborhoods are the most depreciated by Covid?  Is anywhere in Manhattan a seller’s market again?  Are the greater discounts in the condo or the coop markets?  

Clients have been asking me these questions all year and since most official market reports offer only macro-views, we decided to dig beneath the surface to provide intimate snapshots of each major Manhattan neighborhood sub-market and what you can expect in today’s landscape ON THE GROUND.

Tribeca has been a relatively static or declining market in the ensuing years since the market peak of 2015. But due to the typically larger sizes of Tribeca apartments, compared to their counterparts uptown or in Brooklyn, we’ve seen an interesting influx of younger buyers flood the Tribeca market during and after Covid. This has resulted in a nice resurgence in activity and even pricing. In February of 2020, the average price of a 3BR condo was $6.024M, yet by June 2020 the Covid discounts brought the avg price down to $4.572M and by October it was a dreadful $2.684M. However, as of June 2021 the avg price of a 3BR condo has shot up to $6.609M. Tribeca may be seeing a resurgence in the remainder of 2021 and looks to be a hot market again by 2022 if not already.

Chelsea is one of the most advantageous prime locations currently available to buyers looking for deep discounts. For example, in Jan 2020 the average price for a  3BR condo was $6.2M.  In May 2021 the average price was $3.622.  A combination of the glut of new high-end inventory along the Highline and the Covid/Post-Covid market being generally unavailable to foreign buyers due to travel restrictions has caused depreciation. 

In the years following the 2015 market peak, the LES was poised to receive one of the greatest development and infrastructure additions in all of Manhattan, second probably only to NoMad, thanks to scores of new luxury condos of a quality level heretofore unseen, along with the expanded/upgraded Essex Market in its center. But with Covid making other more prime areas like Chelsea and Tribeca available for a discount, the LES has suffered as a result, and many sellers who acquired new development condos in 2016-19 have had to liquidate at a loss.  So this is a good opportunity for buyers to come in and reap 10-20% discounts off original acquisition pricing, and we are still very gung ho for the future of this area and buyers would be wise to invest here now.  For example there were more sales of 2BR condos here during the months of April-May 2021 (39) than all of 2020 (36).  Pricing has not improved but the buyers are clearly taking advantage of the inventory.

Harlem, probably one of the hardest hit during Covid saw a drastic fall in prices. The drop comes more in East Harlem rather than West Harlem although Harlem overall remains a buyers market. The median list price of homes in Harlem was $795K in June 2021, trending down -20.1% year-over-year. The median listing price per square foot was $968. The median sale price was $649.5K.

It’s probably not a surprise that Covid really took the wind out of the sails of Hudson Yards condo product.  The premium buildings are selling modestly but more significantly the market for many new (and recently new) construction condos is aggressively pursuing deals.  It’s unfortunate because this area still shows enormous promise but the pricing is noticeably depreciated. In March 2020 the median closing price of a 2BR condo was $6.305M, hot on the heels of contracts signed during the healthy rebound we saw in Jan/Feb of 2020.  But by December ‘20 it was $3.064M and last month June ‘21 down to $2.527. Still the activity levels are strong so buyers are wise to take advantage. The northern part of Clinton closer to Columbus Circle seems to be faring better than the southern part adjacent to Hudson Yards. 

In the 16 years I’ve sold real estate, the UES has never been considered a ‘hot’ market. Well sometime this spring that all changed, and the UES is being treated to activity levels across the board that are remarkable. This may be due to a variety of factors, not the least of which is that without foreigners dominating the condo market, domestic buyers are looking to exploit the high quality of living the area offers. From January 2019 though December 2020, no more than 2 or 3 4BR condos traded. Yet in 2021 every month has seen a minimum of 7 4BRs sold, with June 2021 boasting a whopping 16. The coop market is surging even greater, where the average price of a 4BR coop in October 2020 was a paltry $1.35M yet has increased incrementally over the last several months to a whopping $6.355M in June 2021. This is frankly a great time not just to sell but also to buy in the UES because this wave will likely continue through 2022 and prove the UES is indeed full of appreciating assets.

What can we say about the UWS? Excessively negative press during Covid lockdown about safety and some mean-spirited criticism of the city’s decision to utilize some hotels for homeless shelters could not keep this nabe down. While the number of sales declined (like everywhere else) during Covid, we’ve seen the area bounce right back without hesitation and by late last year we found buyers already caught up in bidding wars. In June 2019 the number of 4BR coop sales here was 8, by June 2020 it had gone down to 5, and last month it was 12. Pricing has not gone up yet but bidding wars have proven that absorption is quite efficient as demand is stronger here than anywhere else in Manhattan. 

Not unlike the UWS the West Village traditionally holds its value.  What we saw in 2020 was that sellers in the West Village could afford to hold out for a better market rather than sell at a discount or a loss so the amount of trades simply declined. In 2020 the average number of 2BR condos trading was 1.5 per month.  Yet since March 2021 that number has reached a minimum of 6 2BR condos trading per month.  Perhaps an even better metric is the average price--in Jan 2020 pre-Covid it was $4.03M for a 2BR condo. Yet in Dec 2020 it was $4.178M. It turns out the West Village boasted immunity to Covid.

Midtown East typically yields attention to Midtown West but that’s not what we are seeing presently.  While pricing has been fairly stable, with the median price of 2-4BR condos staying curiously the same from essentially mid-2019 to the present, the number of transactions declined during 2020 but have surged this year. There were only 4 2BR condos sold in Dec of ‘20 but by June of ‘21 that number shot up to 24.

Soho selling values were quite strong throughout 2019, then Covid saw sellers holding onto property (similar to the West Village) rather than sell at discount, with much fewer closed sales last year compared to 2019.  But 2021 has been extremely active, with the average price of a 3BR condo in June at $7.377M, and the amount of 3BR sales in May ‘21 (12) exceeding any month overe the prior 24 by a longshot.

Manhattan Rent Prices to Climb Back to Pre-Pandemic Levels

Per the Daily Mail, Manhattan rent prices are on track to climb back to pre-pandemic levels as renters are flocking back to the city, causing the number of available units to drop by 38% in a month. Many New Yorkers who fled to work from home across the country are coming back in a rush to take advantage of the decrease in rent prices, causing apartments to fill up at a drastic rate. In turn, the steady increase in demand will eventually bring the rental market back to where it was in the beginning of 2020. Does this news ring a bell? Maybe because it was our July newsletter headline. If you haven’t already subscribed to our newsletter and want to keep up on the state of the market please do so now!

Spotlight On: Little Island

Looking to take a break this holiday weekend without leaving the city? Little Island is a public oasis located right off the Meatpacking district on Pier 55. The 2.4 acre park is a great place to take in views, walk around, get drinks or bites and enjoy nature while still being in the best city in the world.

Floating Public Pool Project in the East River is Greenlit

+ POOL — the amazing floating pool that will filter NYC river water while providing New Yorkers another spot to cool off on a hot summer day — finally has a set location: the East River!

The project has been in the works for years, but this week the creators have finally received an official “confirmation to proceed with due diligence” from the New York City Economic Development Corporation (NYCEDC), they announced on their Instagram page. This is after two years of review with the city organization!

On the Ground - Market Update - May 2021

The marketing is changing and it’s getting hotter and faster.

The promising market I depicted in January has come to fruition. By all markers, activity levels continue to surge and the data is encouraging.

MANHATTAN

Average sale price in Manhattan was $1.7 in Q1 down 9.4% from Q1 2020 $1.9M

• Average sale price for new devs was $2.1M in Q1 down 24.6% from Q1 2020 $2.8M

• Both metrics point to higher absorption rates, showing that sellers are meeting the discounts demanded by buyers and trading accordingly

• Listing Discount off last price down to 4.6% v. 7% Q1 2020

• Average overall price per square foot down to $1,387/sf from $1,536/sf Q1 2020

• Absorption is escalating in Manhattan, in both Condo and Coop markets

• Signed contracts increased by 45% from January to April

• All price points thriving, coop contracts $1-4M up over 1000% YOY, condo contracts $1-4M up over 600% YOY

• Condo luxury market $4M+ received 89 signed contracts in April

• Coop luxury market $4M+ received 39 signed contracts in April

BROOKLYN

Brooklyn total deals larger part of pie than a year ago accounting for 53% of total deals an increase of 2 pts over LY 51%

• Brooklyn contract pricing overall less discounted than Manhattan

• Average Brooklyn new listing sales price increased by 10% hitting $1.1M over LY $1.0M

• This is in stark contrast to Manhattan sales prices which have declined by 9% likely due to overall need for discounting

• COVID 19 affected Brooklyn inventory differently than Manhattan

• Brooklyn inventory weeks of supply have remained flat throughout the pandemic, while Manhattan inventory peaked in Summer 20 and remains elevated over LY

• Additionally, Manhattan properties are sitting on the market for an average of 138 days v. 89 in Brooklyn

The GREEN at Lincoln Center

About 14,000 square feet of Lincoln Center's concrete plaza will be transformed into an expansive "lawn" to welcome New Yorkers to its cultural campus.
Designed by Mimi Lien, set designer (Natasha, Pierre, and the Great Comet of 1812) and MacArthur Genius, "The GREEN" will open on May 10th and be the heart of Lincoln Center's Restart Stages initiative to bring back performances and help revive the arts sector. The artificial lawn, surrounding the Revson Fountain in front of the Metropolitan Opera house, features swooping sides, seating areas, and a snack bar.

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

The 5 Things You Need to Know to Adapt Your Real Estate Strategy to The New Normal

I hope you and your loved ones are staying safe and healthy during this time.

It’s been a long 6 months of contemplation and observation while adjusting to the new normal.

The reason why I took a break from sending updates since my joining Douglas Elliman and forming The Lanyard Team in January is that I wanted to take time in assessing this new reality to present my thoughts with conviction and supporting data in the midst of all the speculation. I purposefully withheld sharing my analysis until the market reopened in early July, which allowed for the restart of in-person showings in a safe and responsible manner.

As we head into the Fall market and the fourth quarter of 2020, I am here to deliver the facts, dispel myths and present opportunities for moving forward. This message is a reflection of the very ethos of the Lanyard team—to create value and profits for our clients. 

1. THE MARKET IS NOT IN DIRE STRAITS
FOR THE SELLERS.

NYC real estate has experienced depreciation all over, but prime Manhattan and prime Brooklyn are holding up stronger than outliers. As the summer comes to end, and COVID-19 cases remain low, we expect to see many people return to NYC and bring a pickup in the market. I urge you to connect with us for a detailed explanation of your particular property/area.

2. FOREIGN BUYERS ARE STILL IN THE GAME…

if you have the right connections, data, and tools. Investors, both new and repeat clients, are leveraging our marketing tools for successful remote purchases, and my phone hasn't stopped ringing with requests from from India, China and Russia. Since our marketing tools have always included property videos, 3D tours, and real-time video showings, we continue to empower our clients to fully envision themselves in the properties we market.

3. THE SUBURBAN FLIGHT IS REAL, BUT SMART BUYERS STILL (AND WILL ALWAYS) COVET NEW YORK.

If you ask my colleagues in Westchester and Fairfield counties, they are seeing significant spikes in activity from Manhattanites seeking a refuge from the pandemic. But, this does not mean that the migration is one-way. In fact, I am seeing a commensurate shift in buyers returning to prime areas of Manhattan from Brooklyn, Queens, and the tri-state suburbs.

4. THERE IS AN INDISPUTABLE LACK OF CONSUMER CONFIDENCE IN THE CURRENT NEW YORK LANDSCAPE, BUT LET ME DECONSTRUCT WHY:

• Buyers are exploring options outside of prime locations (ex. Park and Madison Avenues) due to residents sheltering in place at their vacation homes;

• The concept of “Location. Location. Location” is taking the back seat while buyers are considering “smart investment” strategies in other areas.

5. THERE IS NO PLACE LIKE NEW YORK.

Bankers have a saying “you make your money on the buy” and so those buyers who are in the long game in New York will be most rewarded. Transactions were down 60% for Q2 and we are seeing discounts as high as 20% from pre-COVID pricing. Once normalcy is restored due to a vaccine (among other factors), the spirit and desire to be a part of something greater will contribute to the revival of one of the greatest cities on earth.  So the window for ‘COVID discount’ will not be open for too much longer.

The savvy buyer always knows not to wait until that moment to transact

This is the guiding philosophy of the Lanyard Team: we are long on New York real estate and a good part of our success has been  finding our clients deals during market dips. 

My mantra has always been: If you wait until the news outlets tell you we’ve hit bottom and it’s time to buy, then it’s already too late.

Additionally, many of our clients who purchased from 2010 to 2015, are now listing their properties for sale at a profit margin that is still substantial enough to warrant an upgrade to a higher price point. That is why we are on track to exceed our record far beyond $100M in profits

That is why we are on track to exceed our record far beyond $100M in profits