In Manhattan and Brooklyn, a wild year concluded with renewed market stability: Closings and signed contracts were up and supply growth slowed.

Manhattan

A positive bookend to an unprecedented year, 2020 ended in much the same way that it began: with the Manhattan market exhibiting signs of stabilization and resilience. In Fourth Quarter 2020, closings grew versus the previous two quarters, signed contracts returned to pre-Covid levels, and supply growth slowed. Pent-up demand contributed to the rebound, but falling prices, low interest rates, more negotiability, a clearer political climate plus news of a vaccine were key contributors as well. Although many of the challenges related to taxes, supply, and affordability remain, this quarter’s results offer a firm foundation for more improvement in 2021.

Deal activity increased significantly in Fourth Quarter 2020, seen in both the annual gain in signed contracts and quarterly growth in closings. Contracts signed, the timeliest indicator of current demand, rose year-over-year each month this quarter, and cumulatively by 8% versus 2019, to about 2,800 deals — the best performance for contracts since Second Quarter 2019. Closings, although down 30% year-over-year as a result of the spring pause in the market, grew 18% from last quarter to about 1,900 sales, bringing the 2020 total to about 7,600 transactions.

Despite improving deal activity, Fourth Quarter 2020 active listings were still 36% above 2019. With over 9,900 units, inventory hit its highest year-end level since 2008. But supply growth did slow this quarter. Listed inventory rose just 4% versus Third Quarter 2020 and, for the first time since March, reverted to typical seasonality and declined on a monthly basis in November and December. Although 3,500 new listings hit the market this quarter, that’s fairly typical for the fourth quarter, suggesting that most of the annual increase is attributable to the surge upon reopening in June. While these are positive signs for the market, high supply is still one of the most significant headwinds facing the Manhattan market’s broader recovery.

Since closings lag contracts by 60-plus days, the last two quarters of price statistics obscured the trend of falling prices being reported by real estate agents active in today’s market. In Fourth Quarter 2020, however, over 90% of closings were for deals inked since March, which provided not only a clearer picture of price trends but also revealed shifts in buyer preferences driven by the pandemic. This quarter, buyers closed on larger apartments, but, seeking value, prioritized space and layout over building and location, which drove median price up about 4% to $1.044M but pulled average price per square foot down 8% to a four-and-a-half-year low of $1,615.

Read the full Manhattan Q4 report.

Brooklyn

Six months following the resumption of in-person showings, the Brooklyn real estate market not only picked up right where it left off before the stay-at-home order, but exceeded expectations for the speed of its rebound. The year concluded on a high note, as Fourth Quarter closings were up 12% year-over-year following two consecutive quarters with annual declines of over 30%. Furthermore, the year-over-year gains in contract activity that began in August extended during the final three months of the year, which totaled 8% more sales than last year. Brooklyn is likely benefiting from the recalibration of demand toward more space for better value, as opposed to proximity to workplaces at higher prices.

Due to a lost spring selling season, the Fourth Quarter 2020 inventory figure reached a level not seen since 2011. As of late December, 2,584 apartments were on the market, 23% more than a year ago. However, the pace of new listings coming to market slowed from about 15 per day in Third Quarter 2020 to about 12 per day this quarter. The most significant increase in the number of listings compared to last year were those priced between $1M and $2M, a historically supply-challenged segment of the market in Manhattan.

Price statistics reveal that the top-end of the market has rebounded the fastest. With 30% of closings trading for above $1M this quarter—the second-highest share on record—median price in Brooklyn spiked 13% annually to $780,000, itself the highest figure on record. Nearly 90% of closings over $1M were for contracts signed since mid-March, underscoring growing demand for more space. Also this quarter, average price per square foot increased 4% annually as buyers also gravitated to high-quality apartments in prime locations.

Read the full Brooklyn Q4 report.

About Our Photo

Manhattan from Brooklyn Bridge Park Greenway, by Namphuong Van, courtesy of Unsplash. Click photo for profile.
Manhattan from Brooklyn Bridge Park Greenway, by Namphuong Van, courtesy of Unsplash. Click photo for profile.

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