By Colin R. O'Leary
February 18th, 2022
It's been nearly two years since the start of the coronavirus pandemic, which resulted in an exodus of New Yorkers fleeing to the suburbs. The strict lockdowns wreaked havoc on the city's economy. It brought the Manhattan residential market to a near standstill, while simultaneously sparking demand for homes in nearby suburban markets like New Jersey, Westchester, Connecticut, and Long Island. Now two years later, the tide is beginning to shift. People are returning to the city, and the Manhattan real estate market is starting to roar back to life.
Last year was a record-breaking year for the Manhattan residential market, fueled by pent-up demand caused by the pandemic lockdowns of 2020. There are still a lot of great deals to be found for buyers who are active in the market. However, the residential market in Manhattan is starting to shift in favor of sellers. For example, the number of homes on the market in Manhattan has decreased significantly year over year. According to real estate data company Urban Digs, the number of active listings on the market in Manhattan has declined by -28% compared to February 2021. There are currently about 5,170 homes available on the market in Manhattan. This number includes all active condo, co-op, and townhouse listings. There continues to be an uptick in signed contracts as well. The number of pending sales in Manhattan increased by nearly 17% compared to February 2021. The total number of pending home sales in Manhattan is currently hovering around 4,050, according to Urban Digs.
The condo market in Manhattan is favoring sellers right now. The condo market has been fueled by the luxury market, or homes selling for above $4 million. For example, the median sale price in January was $1,783,750, a sizable increase of 21% year over year. The supply of condos available for purchase has decreased significantly year over year. The number of condos available on the market as of February 2022 is currently hovering around 2,450, a significant decrease of -29% year over year.
It's a similar story with the co-op market in Manhattan right now. The median sale price for a co-op was $822,500 in January, according to Urban Digs. That's an increase of 8% compared to the same time last year. The supply of co-ops available for purchase in Manhattan also declined by -27% year over year. There are currently about 2,500 co-ops on the market right now in Manhattan.
Interests rates are on the rise, up by almost a percent since the fall. Mortgage rates for a 30-year fixed-rate loan are currently hovering around 4%. The Fed is expected to raise rates further this year in an attempt to offset rising inflation. What kind of impact will this have on the Manhattan market? Only time will tell how much of an impact it will have in a city where many buyers pay in all-cash.
The Manhattan rental market has been on a tear as well. Manhattan rents surged by 23% in January compared to the same month last year according to The NY Post. The median price for a rental in Manhattan was $3,467 last month, just short of the record set in April 2020, when the median rental price was $3,540. There's been a significant decrease in rental inventory. In January 2021, there were 25,883 apartments in Manhattan available for rent. Last month, that number plummeted to just 4,316 available rentals — a whopping 83.3% drop in inventory levels.
The numbers are looking strong for the Manhattan residential market. The market is returning to its cyclical nature. Inventory levels are down and pending home sales are up. February is typically one of the slower months of the year activity-wise because of the colder weather. The market should continue to favor sellers in Manhattan heading into the warmer months of the year. The springtime is typically the most active time of the year for the real estate market in NYC, with an increase in buyer activity coupled with an uptick in new listing inventory hitting the market. The combination of these factors should lead to a continued increase in pending home sales in Manhattan this spring.
Thanks for reading. Let us know where you think the Manhattan market is heading in the comment section below!