Key Highlights
- Though pending sales up, Manhattan prices dropped -6.2% and -5.4% in Brooklyn compared to one year ago
- Rents had steepest drop on record in January, according to new report from StreetEasy
Issue of Rising Sales Volume and Sinking Prices is Simple Supply and Demand Metric
2021 started with awhimper in New York’s real estate market. Prices dropped -6.2% in Manhattan and -5.4% in Brooklyn. Rents pummeled with the steepest price drop on record. Rents in Manhattan dropped -15.5% while Brooklyn’s rent prices declined -8.6%. (All data here represents y/y comparisons and are recognized by StreetEasy.)
Meanwhile, pending sales soared. Manhattan saw a skyrocketing uptick of +30.8% y/y and Brooklyn experienced an uptick of +17.3%.
Supply and Demand Key to Rising Pending Sales and Slumping Prices
According to Nancy Wu, economist with StreetEasy,“Inventory has been at record highs, and buyers have had more options…sellers seem to be coming to terms with the fact that there’s record inventory on the market, and unless they reduce prices significantly, it won’t sell.”
Price Drop of -6% in Luxury Market Only Tip of Iceberg
StreetEasy’s January report recognized a gigantic year-over-year increase in signed luxury contracts but that increase barely put a dent into luxury supplies. Wu said that despite there being +25% more inventory in the luxury niche, “This glut of inventory means that prices have even more room to fall, which would then lead to more contracts.”
Just the price drop of -6% led to an increase of +57% in signed luxury contracts but “…even with that surge, inventory for luxury homes has still been near all-time highs,” said Wu.
Wu’s conclusion? Manhattan sellers will have to reconcile themselves with the reality and make even further price cuts. “There’s no end in sight for how long prices will continue to decline. This -6% drop…seems to be the first milestone of what’s yet to come.”
Thanks to StreetEasy and Bloomberg.
