The first quarter of 2020 was a strong one for residential sales despite the coronavirus pandemic’s drag on fresh inventory.
The number of deals jumped as prices dropped and new development closings soared, according to appraiser Jonathan Miller’s quarterly report for Douglas Elliman.
Miller said the report by and large does not yet reflect the crisis that cost thousands of New Yorkers their jobs and brought many of the city’s businesses to a halt over the final two weeks of the quarter.
“Numbers are tone deaf to the last couple weeks,” said Miller.
According to his report, more than 2,400 condos or co-op units sold in Q1, a nearly 14 percent increase from 2019. Meanwhile, the quarter’s median sales price of just over $1 million was 1.4 percent, or $15,000, shy of the median sales price in 2019.
The price chops were more significant when it came to average sales price, which dropped almost 11 percent to $1.88 million from 2019’s $2.1 million. Average price per square foot plunged even further, suffering a 13 percent drop to $1,540.
Miller attributed that to sale prices of high-end luxury properties taking a hit based on a series of tax changes including last year’s new mansion tax and the threat of a pied-à-terre tax.
“Everything at the high end was hit harder,” he said, adding that it was for the best “because transaction activity kicked up as a result.”
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Another bright spot from Miller’s first quarter report was Manhattan new development closings, which logged their best quarter in two and a half years with 262 deals, up about 67 percent. That was accompanied by a nearly 50 percent decline in average sales price, however.
Miller called the volume of closings a “somewhat random event” that says more about the timeline of construction. He attributed the halving of the average sales price to the relatively few big-ticket closings at 220 Central Park South, where units go for tens of millions of dollars.
Average sales price per square foot in new development also dropped by a third, which he said was because of smaller condos selling during the first quarter. He said the average size of the units sold declined by a quarter to 1,526 square feet from 2,020.
But the pandemic did leave its mark on the quarter when it came to active listing inventory, which fell by 8.4 percent year-over-year to 6,113 homes.
Resale inventory plunged 9.5 percent to 5,122 properties — its first decline in 10 quarters. In early March, Miller forecast the drop in an analysis that showed listing volume down significantly compared with prior years.
Steven James, Elliman’s New York president and CEO, admitted that though the data may not yet show it, agents’ inability to show homes and attend in-person meetings has killed the quarter’s momentum.
“The virus came along and just shot everything out of the water,” he said. “It’s unfortunate, but that’s life.”
Quarterly reports authored in-house by other brokerages reflected a similar sentiment.
Compass’ report claimed coronavirus had already made a “dent” in the Manhattan market, citing canceled open houses and showings that led to reduced sales in the final weeks of the quarter.
Warburg Realty’s report pegged the slowdown in sales activity to mid-February. CEO Frederick Peters asserted that “almost all real estate activity” across Manhattan, Brooklyn and Queens had stopped by the time Gov. Andrew Cuomo issued his stay-at-home order late last month.
The Corcoran Group reported that its volume of signed contracts was up 10 percent year-over-year in January and February before March activity “plummeted,” dragging the entire quarter’s signed contracts down by 8 percent to 2,258.
The impact of the pandemic on the residential market in Manhattan will show up in second-quarter data, according to Miller, who said he expects inventory to continue to fall and nominal contract activity in the short-term.
“Whatever happens, it’s going to be uncharted waters,” he said.
Write to Erin Hudson at ekh@therealdeal.com