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Residential
New York

April swoon in residential market followed bank failures

Contracts for homes fell in April as concerns over collapses mounted

Row of Brownstones; graph lines

(Illustration by The Real Deal with Getty)

By
May 18, 2023, 9:00 AM

The collapse of Signature and Silicon Valley banks — and the ensuing concerns over First Republic bank — took a toll on the city’s residential market, new data suggest.

Contract signings fell in April from the previous month in Manhattan and Brooklyn, despite an increase in new listings, a report by Miller Samuel for Douglas Elliman found.

“I don’t think this is unique to New York,” said report author Jonathan Miller. “We saw the month of April underperforming across multiple regions that we cover.”

While the report is limited to April, the Miller Samuel CEO said he’s seen an uptick in contracts so far in May, suggesting whatever caused the pullback is already in the rearview mirror.

The slump fits with the timeline of the Silicon Valley Bank and First Republic collapses: SVB collapsed in March and concerns about First Republic’s health continued through its early may collapse, but federal regulators’ guaranteeing of deposits and sale of First Republic to JPMorgan Chase appears to have alleviated the public’s worries.

“It looks like the seasonal uptick is continuing,” said Miller. “The U.S. market just took a breath in April.”

The failed banks did not account for a significant share of home mortgages, but fears of a wider banking crisis or economic slowdown might have deterred shoppers from committing to buy a home.

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Brokers in March told The Real Deal they had yet to feel repercussions in New York’s residential market from the Signature and Silicon Valley Bank collapses, though they acknowledged it added uncertainty to the market. Turns out, the pullback just hadn’t shown up yet.

“So far nobody’s account has been compromised in any way and people feel it is being well-handled,” Compass agent Pamela D’Arc said at the time.

New listings for Manhattan co-ops in April rose month-over-month for the fourth consecutive time, to just under 1,000, their highest point since last September. New signed contracts fell to under 500 after having increased in each of the year’s first three months.

New condo listings fell slightly in April to just under 800, while condo contracts fell for the first time this year to about 300, down from just under 400.

New listings for one-to-three family properties continued to climb sharply to just under 60, up from 16 in January when the ascent began. New signed contracts fell slightly month-over-month to under 15.

Brooklyn’s market was much the same. New co-op listings increased, though at a slower rate than prior months, to nearly 240. New contracts fell for the first time this year to under 120.

New listings for condos dipped slightly to just under 300, and new signed condo contracts fell from roughly 200 to 150.

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Tags
Bank FailuresContractsDouglas EllimanLuxury Real EstateMiller SamuelResidential Market Report