When the coronavirus pandemic first hit the U.S., New York City emerged as its instant epicenter. And while the outbreak has, unfortunately, expanded to the entire country, the impact on New York City has been more pronounced. Not only is New York City's unemployment rate higher than the national average, but its real estate market has been notably sluggish over the past 12 months.
But things improved significantly in February on the residential real estate front. And now, there's reason to believe New York City could stage a quicker comeback than expected.
Apartment sales finally pick up
Throughout 2020, many city residents abandoned New York and fled to the suburbs, where home sales saw an instant boom. But the flip side was toppling demand within city limits and record-low residential listing prices.
Across the board, apartment prices have fallen an average of about 10% across Manhattan. But there are bigger discounts to be had. Many condo buildings have cut prices by 20% or more, while luxury apartments on "Billionaire's Row" in midtown Manhattan have been selling at less than half of 2015 peak prices.
It's these low prices, however, that have now fueled a surge in apartment sales, which rose 73% in February alone. In fact, during the first two months of 2021, 2,472 contracts were signed -- the highest level since the Manhattan residential real estate market peaked in 2015. And sales contracts have topped $5 billion so far this year.
A key window is closing for investors
An uptick in residential sales is a good thing for New York City. But real estate investors looking to get in on the action may need to act quickly to scoop up residential properties while they're still relatively cheap.
Last fall, Manhattan had 9,400 unsold apartments on the market. Now, that supply has dwindled to 7,500, close to the historic average. Those looking to snag a bargain may want to line up financing and start apartment-hunting now, before prices start climbing and inventory shrinks even more.
Another thing to remember is that as things improve with regard to the pandemic, there may be an influx of Manhattan buyers willing to commit to owning a home. As such, investors could see competition in various corners of the market, from lower-end studio apartments to higher-end homes listed in the multiple millions.
Along these lines, those buying income properties to rent out may want to act soon. There's a good chance more employers will call workers back to the office once vaccines become more widely available. At that point, many renters are apt to crave office building proximity, and new Manhattan apartment investors will have a real opportunity to capitalize on that need.
The Millionacres bottom line
All told, now's a good time for investors to scope out Manhattan real estate and add to their portfolios -- before demand increases and higher prices take that option away or make buying in New York City a lot less profitable.