NYC Real Estate Market: Q3 2020
Q3 2020 market information is finally available, so now it’s time to take a look at where things might currently stand. Notice I said “might.” Here’s why…
A lot of the data is still more relevant to what happened during the shutdown – in particular, median price, price per square foot and closed sales. Remember – these are all lagging indicators. Sales closed during Q3 2020 would have gone into contract during Q2 2020. This period encompasses almost the entirety of the shutdown except for the last week in June when in person showings were allowed to resume. The market was essentially “frozen” during that time, so prices from that time period aren’t going to be very informative about what may be happening in the current market.
But, we do finally have some data that provides us with more insights post-shutdown – namely signed contracts, inventory and days on market. This is all information that reflects buyer interest during Q3 2020.
Additionally, as opposed to honing in on comparing Q3 2020 stats to last year’s numbers, we really want to focus on the quarter over quarter metrics. Why?
In a rapidly changing market, we want to look at the closest time frames possible because 1) it gives us a better sense of what might be happening right now and 2) last year’s circumstances are completely different from this year.
Speaking of which – it’s also important to note that prices for Q3 2019 were actually lower than normal anyway due to the rush of higher end buyers trying to close sales prior to changes in the mansion tax that went into effect during Q2 2019. So that’s another reason why Q3 2019 isn’t the best baseline for comparison.
So let’s get to it…
Manhattan vs. Brooklyn
In Manhattan, inventory swelled by 57% quarter over quarter. This isn’t at all surprising given that inventory plunged in the previous quarter by historic rates. Much of this inventory likely consisted of listings that were being held back in the spring.
Days on market seemed to stabilize, with time on market up just 2% versus the previous quarter. The most encouraging statistic for the market comes from contracts signed – they were up 167% quarter over quarter, indicating that some buyers did indeed decide to jump back in.
In Brooklyn, inventory reached an 8 year high with a 54% quarter over quarter increase – again, most likely from listings that were originally meant to be listed in the spring.
Days on market likewise seemed to stabilize just like in Manhattan, with just a 2% quarter over quarter increase. But like Manhattan, contracts signed were way up versus the previous quarter, to the tune of 157%.
Where Brooklyn really diverges from Manhattan is in price – while Q3 2020 saw the price per square foot and median price increase for Manhattan, prices were largely flat in Brooklyn.
Does this mean Manhattan is doing better than Brooklyn? Nope.
The mansion tax had a much bigger impact on the Manhattan market versus the Brooklyn market, due to big differences in the median price. Additionally, the Manhattan market during Q3 2020 saw a few high priced sales which pulled the median and average prices for an already smallish number of sales higher.
Instead, I believe the point to take away from this is that despite the pandemic, Brooklyn’s prices have remained relatively stable. At least for the time being.
I believe that Q4 2020 is set to reveal the true state of the market and where it’s likely headed.
More employees know their employers’ plans for returning (or not returning) to the office. Decisions have finally been made about how and when to reopen schools. And people now have a better sense of what their needs are in terms of space. So there’s likely more willingness to move forward with longer term decisions about a home.
Exactly what demand will look like remains to be seen, however. And unlike past election cycles, this year’s election may have an impact on whether or not people feel secure enough to want to purchase a home. At least up until we find out who the winner will be.
We do have some insights as to what’s likely to be popular for buyers, though.
Private outdoor space. Single and two family homes. Shared roof decks and courtyards. In-unit washer/dryers. Private storage. These have already emerged as top features of choice for many buyers. So if you’re looking for these things, be prepared for a bit of competition.
On the other hand, any “quirks” that may have been forgiven in a more buoyant market are now being harshly treated if the property isn’t priced correctly right out of the gate. So if you’re looking for a deal, look for a place that has a “challenge” – ground or basement floor, top floor in a walk up, “not so great view,” funky layout, etc. Or, if you can swing it, look for a new development, especially in areas with large inventories of them.
If you have any other questions about the market or you want to get some stats on a particular area, feel free to reach out to me!