The coronavirus pandemic has battered Manhattan's residential real estate market. And while apartment sales have been picking up, sale prices have been coming down. In fact, real estate investors looking to add Manhattan properties to their portfolios may have an opportunity to score some heavy discounts -- while also recognizing that the city may have a pretty prolonged recovery ahead.
Manhattan apartments are selling for less
On a national level, housing inventory is at a record low. But in Manhattan, there are plenty of apartment listings to go around. Most buyers, however, aren't paying sellers' asking prices. Instead, they're insisting on getting a bargain.
Of the 2,457 Manhattan homes that sold during the first quarter of 2021, 97% closed at or below the asking price. That's the highest share of sub-asking price deals since 2009, according to a report by appraiser Miller Samuel and real estate brokerage firm Douglas Elliman.
During 2021's first quarter, the median price for sold condos was $1.55 million, down 4.7% from a year prior. The median co-op price was $780,000, representing a 3.8% decline.
In certain neighborhoods, the discounts were even more pronounced. In Midtown East, condos were discounted 14% on average at listing, and the median price of completed sales in that neighborhood fell 12% to $1.3 million, according to brokerage firm Serhant. In Midtown West, the median price of completed deals fell 19% to $1.04 million.
A big reason Midtown Manhattan real estate sold at such a bargain is that the area is loaded with office buildings -- which have largely sat vacant for the past year as companies have shifted their employees to remote work. As such, this part of Manhattan has limited appeal from a residential standpoint in general. And at a time when proximity to offices is hardly a selling point, it's not shocking that buyers are getting a solid opportunity to underpay.
Is now a good time to invest in Manhattan?
From a bargain perspective, now's when real estate investors should seek out deals in Manhattan. But investors should also proceed with caution. It could still take many months for Manhattan's nightlife to open back up and for the remote work trend to wane. As such, the lure of the city may be muted for quite some time, and those who buy apartments in the hopes of securing rental income may end up sitting on vacancies for a good number of months, especially given the number of existing apartments already without occupants.
Those who can afford to retain vacant apartments for a short while, however, have a chance to lock in Manhattan real estate on the cheap and capitalize on the boom that's apt to occur once things really improve on the coronavirus front and renters start flocking back to the city.
As such, now is actually a good time to buy in Manhattan for investors who recognize what they're getting into -- and are willing to wait out a few tough months to profit big time on the other end of the pandemic.