President, Brown Harris Stevens Development Marketing. Specialized in pre-development planning, marketing and sales of new developments.
The redevelopment market in New York City has recovered quickly and furiously, reassuring naysayers who complained that the city is doomed to a slow and painful recovery. In contrast, our company’s data shows that the new development market in Manhattan in 2021 saw 980 new contracts signed through June 30, 2021, an increase of 34% over the same period in 2019. Also, according to our calculation of the current pace – 163 units per month on average – the New Development Market in Manhattan will pick up about 1,960 new development units in 2021.
To what can we attribute this impressive recovery from a once-in-a-lifetime event?
• Pent-up demand: With savvy buyers believing the market had bottomed out, many began looking for a new home or investment property in the third quarter of 2019 and early 2020. These shoppers did their homework, shopped online, and took virtual tours in search of the perfect opportunity. Now, when the vaccine’s effectiveness became apparent and a new government took over distribution, buyers realized that the window of opportunity for slightly lower prices and selection of inventory would be short-lived. They took advantage of this with ready-to-use new developments that offer discounts such as free community fees for up to 10 years. These benefits prepared the pump for quick recovery.
• Covid cabin fever: Looking at the same four walls for a year aroused the longing for a new beginning, more space, open space and a view. This helped to increase the demand for new developments. Buyers began to realize that their current homes did not meet their needs. With historically low interest rates, a healthy supply of new, ready-to-move-in products, and growing demand for resale homes, upgrading additional bedrooms, patios, or alcoves was critical.
• The housing boom in the suburbs: With many fled the city when Covid-19 spread, the suburbs saw a boom that made it possible for empty nests in particular to sell their homes at prices well above what they could have sold in the past five years . Many of these empty nests have chosen to take advantage of the incentives and price adjustments in the Manhattan market. They looted trophy penthouses, pieds-a-terre, and two to three bedroom condominiums.
• Back to school: With most Manhattan universities announcing the return to face-to-face teaching, many parents have chosen to help their college-age children buy a new home by investing in Manhattan real estate rather than renting an apartment. Many of these parents assume that one day they will move to town themselves so that their children can go to school while their equity grows. If their child moves on, the parents can either live in the apartment permanently or part-time.
Together, these four points of contact helped make the first half of 2021 a record time for the New Development Market in Manhattan. Low interest rates, high demand for homes that are comfortable to work with as employees re-occupy their offices, and record-breaking jobs have led to this incredible restart.
Demand is expected to remain high in the second half of 2021 as the market for foreign investors heats up and the market reaches a balance between seller and buyer. New York City has long proven that it has bounced back above expectations after major events, and so has Covid-19.
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