Big Apple Buyers Are Back As Big Demand Fuels Market
New York is baaaa-ack. The energy is apparent, from the bustling restaurants to top talent returning to office buildings. And along with this upswing has come a renaissance in New York real estate.
“We are currently in a correcting market and heading back to pre-pandemic economy norms: balanced supply and demand, attractive value-related pricing, a re-embracement of residential life in Manhattan, and our beloved international buyers ARE back,” says Nikki Field with Sotheby’s International Realty – East Side Manhattan Brokerage.
In fact, despite the news swirling around about inflation and interest rate hikes, demand remains strong. So what does that mean for buyers and sellers? Top agents from Sotheby’s International Realty shared some insights.
Portrait of a New York Buyer
Today’s buyers run the gamut—from current residents looking for more room to international buyers, as Field mentioned. “I’m doing lots of FaceTime sales and seeing a lot of all-cash buyers,” says Lena Datwani, with Sotheby’s International Realty – Downtown Manhattan Brokerage, with one significant segment coming from families with kids attending New York’s prestigious schools like NYU, Parsons School of Design and Columbia University.
Lisa Larson of the East Side Manhattan Brokerage mentions that the Madison Avenue corridor in particular has welcomed numerous new faces who were attracted to a flow of bespoke units, which previously had only typically been available downtown. “These new projects sold out quickly, with an amazing amenity suite and lots of light to capture today’s popular aesthetic,” she says. She also cites Hudson Square as a newly popular address, describing its vibe as “Tribeca mixed with Silicon Valley.”
Serena Boardman is seeing an influx of family purchasers, those in their lower 30s to mid-50s, who are either moving from downtown to the Upper East Side, or expanding their foothold here. Families are needing and desirous of more space, so they are our most active group of buyers. And they have a new appreciation for access to Central Park and better proximity to schools. Plus the Upper East Side returned to normal more quickly post-pandemic than some other parts of town.
Field says her team currently identifies the Upper East Side and Midtown co-ops as the “opportunity zone” of the moment, followed closely by new development.
Yet the market shows signs of tempering, which can shift a buyer’s perspective, notes Glenn Norrgard of the Downtown Manhattan Brokerage. “When there’s a pause, we always see a flight to quality. Prime locations will always be prime, and those are where we are seeing properties getting shown the most.”
Prices Moderate
The outsize bidding wars of the recent past may well be a relic. “Sellers became used to people paying over asking, but prices had been inflated, and it’s no longer that type of market,” Datwani cautions. “Sellers need to be competitively priced to appeal to a more price-sensitive buyer. It may sound counterintuitive but such an approach often leads to a higher price for the buyer, by driving activity and interest to what buyers perceive as a fairly priced property” adds Larson.
“It’s a challenging market to explain to sellers,” says Boardman. “I’m trying to encourage sellers to price into the market because properties that are wildly overpriced won’t get the looks they deserve.” After all, it’s preferable to have a buyer take a look and want to show their partner or decorator than to leave with the impression it should have been priced lower. “You want them to be surprised in a positive way, rather than have them nitpick because they expected more. It makes no sense to price too ambitiously and have people be disappointed.”
Norrgard terms the current market as “realistic.” He finds that clients are making thoughtful decisions rather than just trying to beat someone else out and then suffering buyer’s remorse as the dust settles.
The agents warned about putting too much stock into asking prices—or even closed prices—when searching for comparables. They agree it’s vital to have a pulse on the market because it changes day to day.
In fact, they believe it’s a secret weapon Sotheby’s International Realty agents offer as a full-service brokerage. That’s because even though they are often known for their high-end clientele, they are active in more than just the top, points out Boardman. “Because we do deals up and down the spectrum, it allows us to really understand the market inside and out.”
In addition, they share knowledge, which puts their clients at an advantage. “I know that the best brokers in the city are with Sotheby’s International Realty, which allows me to bring knowledge my buyers can’t get online,” says Larson. “We share best practices among ourselves more than most other agencies and this access to information is golden in a fast-changing market.”
For example, she says, they often deal with co-ops, where it can take three months to close a deal and then another one to three months to log the sales price. By then, the market may have moved substantially. “You need real-time intelligence, and we spend a lot of time studying the market so we can help our clients interpret the headlines.”
Accurate valuations and correct pricing are essential, agrees Field. Today’s luxury buyers and sellers are armed with deep, and sometimes confusing, data. An expert advisor can dissect and translate the information accurately, with clarity and in real-time.
Norrgard recommends looking at properties under contract or pending as that provides the best information on exactly what’s going on right now. “Closed data often can be outdated quickly so you need to be forward-thinking. A respected broker will have relationships that allow them to consult the broker who has a property under contract to suss out that real-time price information.”
The New Wish List Offers Insight to Sellers
More than ever, everyone wants a property in move-in condition, says Datwani. “They don’t have the time to deal with overseeing a renovation: Labor and contractors are in short supply; everything is expensive; and many people can’t stomach a remodel while they are working from home.”
That’s why Larson says one of the hottest opportunities and best buys today for the right person is a renovated prewar co-op, a property that has been falling out of favor precisely because they need work, yet at their core are wonderfully built. “It will take some time and a strong constitution to tackle the renovations, but the price and value are there. We are seeing buyers who want to stay long-term and therefore recognize the benefits of expending the energy and attention to end up with exactly the product they want,” she says.
On the selling side, Norrgard has always been a proponent of staging, but he says today it’s more of a priority than ever. “There’s a premium to be paid for properties that are turnkey,” he says. Today’s buyer is savvier than ever…they’ve been in showrooms and seen renderings of apartments that are show-ready so it makes them that much more critical when they visit one that hasn’t been styled by a professional.
Boardman recommends sellers consider what their space would look like if Architectural Digest was coming to photograph it.
Edit things down; crisp it up, she advises. And that doesn’t mean a total makeover, just creating something people can relate to. If your windows look like ‘Gone with the Wind,’ take the balloon fabric out, she says. You have one opportunity to wow your buyer.
Plus, editing your space now will be a favor your future self will appreciate, she notes. “After all, you have to clean and get rid of things eventually when you’re ready to move so just do it now and get the bonus of a place that’s easier to show.”
One worrisome trend she’s noticed is buyers who feel empowered to work without a broker. “Buyers are much better off if they are represented by someone who is looking out for their best interests amidst all of the properties on the market. Working with someone who is immersed in the market can make an enormous difference ensuring that you are not vastly overpaying, unaware of issues, or making other mistakes that are easy to do when you decide to go it alone.”
Expecting a Brisk Fall
Get ready for a great end to 2022, the group concurs. “We saw that it was a little tentative last spring, but that’s changed,” says Boardman “We have had a solid summer market and continue to sell at a steady clip.”
“In all the years I’ve done this, whenever something in the world disrupts the normal cadence of sales, it always comes back,” Norrgard says. “There might be a lull, but then it comes back, and eventually it comes back with a vengeance.”
While Field agrees that they all welcome the return of a balanced market with equal parts supply and demand, she adds that trophy properties still attract and deliver the luxury buyer Sotheby’s International Realty is known for, citing recent mega offerings, such as 5 East 64th, The Versace Mansion, which is a one-of-a-kind couture residence with an asking price of $70 million. In addition, she says many private elite offerings that never hit the public market are again selling quickly and successfully. “New York is indeed back,” she confirms.