December 2020 Market Overview

  • Karp Dagan Team
  • 12/1/20

As the end of 2020 approaches we saw renewed interest with an increase in contracts and activity. With a COVID vaccine on the way, soaring equity markets, the possibility of additional Federal stimulus and STILL super-low interest rates, 2021 brings hope for a return to normalcy.

Wishing you a fantastic holiday season and a very happy new year!

Sales Market November saw 897 contracts signed, this was a 8% increase from October.  There were also 676 units that closed, up 10% from the previous month. There were only 949 new listings to hit the market, which was a 29% decrease compared to the previous month, and 1,658 properties were delisted. This led to a 1% decrease in supply from the previous month. All of these figures point in the direction of a more balanced market which will probably remain until the end of the Winter. We’ll have to see how the next few months play out before a new surge of inventory hits the market likely in early Spring. 

Luxury Market Last week, 21 contracts were signed for properties above $4 million, a healthy bump from 14 the week prior, according to data from Olshan Realty. Since the start of September, a total of 227 luxury deals have been signed, exceeding the 219 signed in the same period last year.  In the past two weeks, there were more deals done for properties priced above $10 million than any other two-week period in the past nine months.

The biggest sale last week was unit 58A at Extell’s One57. The owner spent $34 million on the property in 2014, and listed it in March for $24.8 million. It went into contract with a final asking price of just $22.5 million.

Rental Market Last month was the busiest month for new leases in Manhattan in November in more than 12 years. More than 4,000 new leases were signed in the borough in November, a 30% year-over-year jump from about 3,100 the year before. There is a caveat though. The borough’s rental inventory is the third-highest on record with. The median net effective rent was down nearly 22% year-over-year to $2,743, compared to $3,502 last year. Real estate appraiser Jonathan Miller said that was the highest rate of decline he has ever tracked in Manhattan. We can tell you first hand, it sure feels like it.

Pied A Terre Tax Come January, state legislators are likely to restart discussions on taxing part-time homeowners in New York City to fill the growing budget gap. The current proposal would hike property taxes by varying amounts for 1 to 3-family homes with market values exceeding $5 million and condos and co-ops with assessed values over $300,000. Its proponents say it could raise about $390 million annually for the state.

The issue is that the pied-à-terre tax could further depress an already-soft luxury condo and co-op market in the city. Homeowners are joining opposition, saying that the new levy could hurt the city’s wealthy full-time residents who have more time in their second homes since March when the pandemic took hold of the city, and may ultimately decide not to come back.

SALT Impact There are rumblings that Goldman Sachs is considering moving its asset management offices from New York City to South Florida. This move would take crucial jobs and economic activity away from NYC and send a negative message to other major New York-based institutions as they assess their future here.  

One of the key factors that may be playing a role in their decision is the federally imposed cap on state and local tax (SALT) deductions – which took effect in 2017 – as part of the reason why individuals and businesses based in New York may now be considering moves to other states amid the COVID-19 pandemic.

REBNY is advocating for the State to enact a SALT Parity Reform measure that would allow pass-through businesses to shift the incidence of the tax from the owner to the entity, restoring the deductibility of these tax payments. By doing so, New York’s pass-through business owners receive a tax credit shielding them from double taxation. This is a solution to the federal SALT cap for hundreds of thousands of New York’s employers at no cost to the state. Local Congress members are planning to submit legislation in January to repeal SALT. 

Compass Expands to Hawaii Compass has announced its expansion to the State of Hawaii. Top agents from O’ahu, Maui, Kaua’i, and the Big Island have joined the firm. “Compass agents across the country have been asking us to come to Hawaii for some time. We’re excited to be able to deliver for our customers by connecting them to this incredible group of agents with a deep understanding of Hawaii real estate,” said Compass Founder and CEO, Robert Reffkin.

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