January 2021 saw 843 contracts signed, a similar number to the amount signed in a very busy December 2020, and an 11% increase in contracts compared January 2020, which is a great sign of recovery. We also saw a 4% decrease in active listings month over month. As signed contracts continue to surge, while inventory numbers remain stagnant, we can only hope that this is the first step to a more balanced market than we have been in since almost a year ago.
Luxury Market Thirty contracts were signed last week at $4M and above. This was the largest total since the third week in November 2019, when 30 contracts were also signed. 21 of the deals were condos, 4 were co-ops and 5 were townhouses.
Rental Deals Go Up, Prices Continue To Go Down The surge in rental activity that defined the Manhattan and Brooklyn markets at the end of 2020 has continued in the new year — and so has the trend of tumbling rents. January was unusually active in both boroughs, with the most number of new leases signed for that month in 13 years. There were 6,255 new leases signed in Manhattan, compared to 3,969 a year prior — a nearly 58% increase. There was also a 170% increase in inventory year-over-year, with 12,447 available units versus 4,610 in 2020. And while the vacancy rate has been slowly decreasing from November’s record of over 6%, it remains high, at 5.33%. Rents, however, were down year-over-year: The median rent in Manhattan was an even $3,000, compared to $3,595 in 2020.
An Opportunity In Studios Condos in Manhattan are often used as investments, but recent market volatility has dramatically reduced returns. A study by Urban Digs suggests that with the sales market recovering, investors today may be able to find opportunity in the segment that has taken the biggest hit, the studio market. The pandemic and accompanying lockdown dealt a blow to Manhattan rentals, with thousands of leases expiring at a time of low demand. The resulting supply glut and lack of demand brought some lease rates down approximately 20% from previous years’ levels. At the same time, in the sales market, prices wobbled, but did not crash. The decrease in rental income alongside stagnating sales prices translated directly to a reduction in landlords’ investment yield as “cap rates” — a measure of return for rental properties — dropped to historic lows. But because the drop was mainly due to falling rents, even a modest recovery could potentially double or even triple current yields.
US Home Sales Surge U.S. home sales in 2020 hit their highest level in 14 years, fueled by ultralow interest rates and a pandemic that sent buyers scrambling for more spacious homes to accommodate remote work. Economists say today’s housing market is less risky than during that boom 14 years ago. Mortgage lending standards are tighter, and the supply of homes on the market is lower relative to demand. There were 1.07 million homes for sale nation wide at the end of December, down 23% from December 2019, according to NAR.