NEW YORK CITY- Investment sales for co-ops and condos in Manhattan took off in the first quarter of the year, with sales jumping year-over-year after two straight quarterly declines. Now, the springboard that was the strong economic market supporting investment activity has faltered because of the coronavirus pandemic, also known as COVID-19, according to a new Douglas Elliman Manhattan sales report.
“After a fast start to the quarter, the coronavirus outbreak quickly slowed market conditions by early March,” the report noted.
For the new year, beginning 2020 through mid-March, re-sale listing inventory fell year-over-year for the first time in ten quarters and all luxury price trend indicators declined year-over-year for the second straight quarter. The silver lining in the report is that the largest year-over-year increase in new development closings in two and a half years happened during Q1 2020.
Due to the global pandemic that COVID-19 is market conditions cooled due to uncertainty and market ambiguity, which led the Federal Reserve to make two significant rate cuts and a statewide shutdown of non-essential businesses. As a result of current conditions, listing inventory fell quarter-over-quarter, in the first quarter for the first time since 2007.
Key trend metrics for Manhattan are as follows, median sales price slipped 1.4 percent to $1,060,000; the price per square foot declined 12.9 percent to $1,540; average sales price decreased 10.9 percent to $1,887,740; the number of sales jumped 13.5 percent to 2,407; listing inventory fell 8.4 percent to 6,113; days on market rose 16.2 percent to 115 days; listing discounts were 7.2 percent, up from 6.9 percent and months of supply was 7.6 months, down 19.1 percent.
Although there is no crystal ball to determine where the market will land, current sales contract activity does not account for the market impact of the coronavirus yet since it lags. If the outbreak is not prolonged, there is still potential for a release of pent-up demand, but this depends on the extent of damage done to the economy, according to the report.