Manhattan apartment sales in the second quarter saw their biggest decline in three decades — and the worst quarter on record — as the real estate lockdown and urban flight after the Covid-19 crisis put a freeze on the market.
The total number of sales in the second quarter fell by 54%, the largest percentage decline in 30 years, according to a report from Miller Samuel and Douglas Elliman. The median sales price fell 18% to $1 million, the biggest decline in a decade.
There were only 1,147 sales in the quarter — the lowest number on record, according to Compass.
While the data is backward looking and reflect the sudden closure of the real estate market and New York City economy during the coronavirus pandemic, the extent of the drop shows just how far Manhattan real estate has to climb to recover. Brokers were barred from showing apartments from March until June 22, so buyers have only been able to start shopping again in the past week.
"Manhattan was effectively shut down throughout the second quarter until the final week," the Miller Samuel/Elliman report said.
While deals could take a while to materialize, sales contracts also fell in June. The number of new signed contracts for co-ops fell 78% in June compared with a year ago, according to the report. Signed contracts for condos were down 74%. Co-ops in the $2 million to $4 million range were hit hardest in June, with an 86% decline.
Brokers say business has come rushing back since the ban on in-person showings lifted last week, with a flood of buyers looking apartments.
"Agents are going nonstop right now," said Bess Freedman, CEO of Brown Harris Stevens.
Yet many potential buyers — especially the wealthy — have left the city for the summer to decamp in the Hamptons, New England or the West and may not return to the market until the fall or later. Some may not return, given the health concerns and lasting impact of the Covid-19 crisis on New York's amenities and infrastructure.
It also remains to be seen whether the discount deals that buyers are expecting will materialize. With so few deals, analysts say true pricing remains a big unknown. So far, sellers are cutting prices only in the single digits, which may not entice today's discount-minded buyer. So far, buyers making offers of more than 10% off the asking price are mostly being turned down, according to research from broker Fritz Frigan of Halstead.
"Sellers can't be married to pre-pandemic prices," Freedman said. "Everyone needs to be reasonable and fair about the new environment."
Brokers say the most immediate pressure will be on the rental market, since renters can more easily leave the city — and fewer renters are moving in.
"There is going to be an incredible supply of rentals," Freedman said. "We are going to see a lot of negotiating and landlord incentives."