Experts Bullish on Continued Manhattan, NYC Metro Housing Recovery
John Jordan | February 23, 2022
WHITE PLAINS—A panel of real estate executives agreed that the exodus from Manhattan due to COVID-19 is over and that the recovery in the Manhattan luxury housing market has gained momentum that will continue this year.
In addition, the recovery, fueled by a roaring stock market, low interest rates and rapidly declining COVID infection rates, has expanded to the city’s outer boroughs, which are now also seeing increased sales and demand.
The Hudson Gateway Association of Realtors, Inc. (HGAR) and OneKey MLS hosted a virtual panel discussion on Feb. 10 entitled “Getting the Deal Done: Pent-Up Demand – The Rise of Penthouses and High-End Properties.” The program, moderated by Brian D. Tormey, NTP, President of TitleVest, a leading NYC-based provider of title insurance and related real estate services, featured Meris Blumstein, licensed associate real estate broker, The Corcoran Group, NYC; Dana Schulz, editorial director, Marketproof, a NYC-based real estate intelligence and analytics company; and Steve Cohen, associate broker, Douglas Elliman Real Estate, NYC.
“The market definitely softened in the fourth quarter but, right now, we are on par with the first quarter of 2021 and are carrying that momentum into 2022,” said Richard Haggerty, CEO of HGAR and President and Chief Strategic Growth Officer of OneKey MLS, the regional multiple listing service for New York.
Haggerty kicked off the discussion with an overview of New York’s market and cited OneKey MLS data to compare pricing trends for single-family houses over the last two years and noted that there was “incredible price growth across the board” in January 2022 over January 2020.
In terms of the northern suburban markets, he said, “In Westchester, we’re seeing a 13% increase in the median sale price; in Sullivan County, it’s 97%, and in Suffolk, where we’ve got The Hamptons, it’s 30%,” Haggerty said. “When you think about what it was like when COVID hit, and how quickly we have recovered, it really is staggering.”
The panel was asked how the rise of the cost per square foot over the past decade is impacting the luxury market and whether the growing percentage of units above $2,000 per square foot would continue or plateau?
“If you look at the history of pricing in New York City, it peaks, flattens and then goes back up above where it peaked before,” said Blumstein of Corcoran. “I expect that will be the case going forward. We’re at a pretty comfortable place, other than with some of the new buildings being priced above $5,000 a square foot. Generally, if you’re priced correctly, you’re getting sold. If you’re priced too high, you’re sitting on the market … unless it’s something very unique.”
Cohen of Douglas Elliman, agreed. “The right pricing is always important – otherwise a property can simply sit. Particularly in this market. In Manhattan, we’re seeing some bidding wars and we’re potentially getting back to a seller’s market. There is high demand right now and inventory is low, so that’s part of what’s driving it, but properties still have to be priced right,” he said.
Both Blumstein and Cohen agreed that owners of new luxury development projects had been offering concessions during the height of COVID, but have now in light of the low inventory on the market drastically reduced or eliminated concessions all together.
With the current lack of inventory, Blumstein said, “Why should they (building owners) give concessions? I find that there are some new developments that are giving concessions still and there are some that are absolutely not. We are back to the buyers paying the transfer taxes generally or maybe a portion of them. We are back to some kind of stasis, more like the old days of pre-COVID.”
Cohen added that the concessions and price reductions offered at new development properties during the early days of the COVID crisis were the highest in his 22 years in real estate.
He said new luxury building owners no longer need to entice buyers with attractive concessions. “There is demand and a lack of inventory for good product,” Cohen noted.
HGAR’s Haggerty noted that a major issue on the horizon in the New York City housing market is that pre-World War II buildings in Manhattan are facing costly retrofits to comply with city and state green energy and climate change goals or incur hefty fines for not doing so.
“I don’t think the city or the state can afford to just take the approach of financially penalizing these buildings. There is just too much (pre-War) housing stock,” Haggerty said. “I think there has got to be a creative discussion about how the state and the city can actually help some of these older buildings make that transition.”
The panel wrapped up with a look at luxury markets in other boroughs and surrounding areas of New York City. “They, too, are enjoying a bounce-back,” said Schulz of Marketproof.
“We’re seeing these ultra-luxury units spreading across Manhattan so of course that’s going to spill over to the boroughs,” Schulz said, and pointed to new developments like Skyline Tower in Long Island City, which had the most sponsor contracts of any New York City new development property in 2021, and 11 Hoyt in Downtown Brooklyn, which came in second.
“We’re seeing it with the pricing and even the media attention buildings in Brooklyn and Queens are getting,” Schulz added. “Quay Tower in Brooklyn Heights had a $20-million sale and another $10-million sale. And, the new one everyone is talking about—Olympia Dumbo – they have the highest price per square foot, about $2,200, in the borough with a penthouse priced at $19.5 million.”
“Getting the Deal Done” is part of the “Be Your Best” webinar series created by HGAR and OneKey MLS, to help Realtors and agents navigate a changing landscape amid the pandemic. The event was sponsored by TitleVest.