Did the Suburbs Kill the City Real Estate Market? Maybe Not.

One of the most hanging results of the pandemic in New York was the outbound motion from Manhattan to much less crowded suburban neighborhoods and the subsequent increase of the suburban actual property market. Real property in the metropolis and suburbs appeared to be a zero sum recreation.

“This outbound pattern created the idea that the suburbs had their day at the cities’ expense, and that cities were over,” stated Jonathan Miller, of Miller Samuel, the appraisal company. “As it turns out, the assumption that there’s a binary relationship between city and suburbs isn’t quite right, as measured by sales activity.”

Mr. Miller contributed information for this week’s chart, which gives a timeline of gross sales exercise in Manhattan and the suburban county of Westchester, the place exercise is consultant of that in different New York City suburbs.

By the finish of the second quarter of 2020 — a few months into the pandemic market — gross sales in Manhattan had plummeted about 54 p.c year over year. In Westchester, the drop in gross sales was about 27 p.c. By Q3, six months into the pandemic, Manhattan gross sales had crept upward, about 46 p.c decrease in contrast with a year earlier, whereas Westchester’s had been effectively on the rise, inside 1 p.c of the earlier year’s ranges. By This fall, the Westchester gross sales had surpassed the earlier year by about 13 p.c, whereas Manhattan gross sales had been 21 p.c decrease.

Sales in Manhattan had been nonetheless lagging, however there was regular enchancment, and by Q1 of 2021, transactions in the borough had inched about 2 p.c above the earlier year’s degree. Tracking the quarterly modifications this fashion reveals that Manhattan gross sales exercise was growing proper together with that of the suburbs. So why does the dire impression of the Manhattan residential actual property market persist?

“It’s an optics problem.” answered Mr. Miller. “Companies haven’t called their employees’ back yet. Think about Midtown office towers — 80 percent empty, and they support the street-level retail. So when a camera pans over Times Square, it’s all boarded-up stores. But if you did the same thing on the Upper East Side, while it’s not normal, you have people walking around all over the place, outdoor dining …”

Sales are one factor, however costs matter too. Median sale costs in Westchester throughout Q1 2021 had been 10.8 p.c increased year over year, whereas in Manhattan they had been up simply 1.4 p.c, a rise pushed by bigger and higher-priced items, in accordance with Mr. Miller. “Considering that,” he stated, “prices are generally down 5 to 7 percent pre- vs. post-pandemic lockdown.” But these low costs could not final. “Activity leads pricing, and the activity is there.”

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