New York City real estate has taken a major beating in the course of the pandemic. Not only have landlords struggled to fill vacant apartments, but property owners have had a hard time finding buyers over the past year. In fact, the overwhelming majority of Manhattan homes that sold during the first quarter of 2021 closed at or below those properties' respective list prices, which represents the highest level of sub-asking price deals since 2009.
But while Manhattan's real estate market may be generally sluggish, one corner of it is starting to show signs of life -- luxury homes.
Demand for luxury properties is up
The upside of buying property in Manhattan right now is getting to capitalize on bargain pricing. But even non-bargain hunters are beginning to show more interest in New York City homes.
A recent report from Olshan Realty reveals that there was a 60% increase in real estate contracts signed on luxury homes in Manhattan during the first quarter of 2021 as compared to the same time period in 2020. In fact, there were 41 contracts signed for homes priced at $4 million or higher during the week of March 15, bringing the year-to-date total to 343. During that same time period last year, only 215 similarly priced contracts were signed before Manhattan was largely shut down to cope with the exploding coronavirus outbreak.
Why the sudden increase in luxury home demand? Progress on the coronavirus vaccine rollout could be fueling more interest. Once things improve on the pandemic front, Manhattan nightlife could open up, and those who enjoy it may want to be close to the action. And buyers who have the budget for higher-end homes are clearly trying to get in now, while prices, though obviously high, are still competitive on a comparative basis.
Is now a good time to invest in Manhattan's luxury market?
From a resale perspective, there may be opportunities to score luxury properties at a relative discount now, given that Manhattan's real estate market has yet to recover and nightlife is still largely shuttered.
But buying luxury properties is a mixed bag. On the one hand, these homes can be a hot commodity due to their more limited quantity, and in a healthy market, there's the potential for serious profit. But since it's tough to predict when Manhattan as a whole will recover from the impact of the pandemic, investors who buy luxury properties today may get stuck holding them in their respective portfolios for quite some time, thereby impeding their cash flow.
Of course, the fact buyers are showing an interest in luxury homes in Manhattan could be a sign they have high hopes for the city. And that sentiment could trickle down to the general real estate market. Property owners in Manhattan who have struggled to find buyers may see their luck turn around in the near term, while landlords may have an easier time filling vacancies. New York City has a strong history of recovering from crises, and at this point, there are signs it's well-poised to overcome the impact of the pandemic soon enough.