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Manhattan condo reductions might finish quickly if gross sales leap 73% in February

A man enters a building with rental apartments in New York City on August 19, 2020.

Eduardo MunozAlvarez | VIEW press | Corbis News | Getty Images

Homes for sale in Manhattan rose 73% in February, and realtors say the days of big price cuts and business in the city may be drawing to a close.

According to a report by Douglas Elliman and Miller Samuel, more than 1,110 sales contracts were signed in February, up from 642 in 2019, making it the third straight month of year-over-year growth.

After a historic decline in business volume in 2020 as hundreds of thousands of people moved from the city to the suburbs and other states, Manhattan's real estate market is recovering faster than many brokers and analysts expected, thanks largely to advances in Covid vaccines and other states Price cuts.

A total of 2,472 contracts were signed in the first two months of 2021 – the highest since the Manhattan market peaked in 2015, according to Garrett Derderian, director of market intelligence at Serhant, a real estate agent. Sales contracts in 2021 have so far exceeded $ 5 billion.

"This is a remarkable rebound from 2020, and there was a trend from the election of Biden in November to the announcement of the first viable vaccines for Covid," Derderian said.

Jonathan Miller, CEO of Miller Samuel, said much of the activity was driven by lower sales prices, which have fallen an average of 10% in Manhattan. Many condos have had to drop prices by 20% or more, and resale of some luxury apartments on Billionaire's Row in Midtown Manhattan sold for less than half of their top prices in 2015.

But now that demand is rising from return-to-town buyers, price cuts and deals could soon end or fade, brokers say. The stock of unsold homes, which peaked last fall to more than 9,400, has shrunk 20% to around 7,500, which Miller says is close to the historical average.

"It looks like there will be a short window of price cuts," said Steven James, president and chief executive officer of Douglas Elliman's New York brokerage.

Of course, there is still a large supply of "shadow inventory" – or apartments that are empty but not listed – and sellers who need to sell quickly still have to offer a discount, according to analysts.

Potential tax hikes in New York could also extend the recovery, along with remote working guidelines that allow workers to live outside of the city. Many say it could be years before prices and business volumes in Manhattan return to pre-pandemic levels.

However, analysts and even the most bullish brokers are surprised at how quickly Manhattan real estate is rebounding from last year's record decline. Brokers say buyers are a mix of three categories: those who have left town and are returning, younger buyers who have been ousted from the market for years and can now buy thanks to price cuts and low mortgage rates, and new buyers who have sold theirs Houses in the suburbs at high prices and want to try to live in the city.

Much of the growth is being driven by the high-end space as listings for listings over $ 10 million have quadrupled. But studio apartments and one-bedroom apartments are also showing strong growth among younger buyers.

"The bigger narrative is the inbound migration to Manhattan," Miller said. "I think the youth renaissance we're going to see in Manhattan is a big part of the story."

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