Half of all homes sold in the U.S. today trade at over the asking price. There are, on average, a little over five offers for every home sold in 2021. Days on market, historically averaging around 60, now stand at 20. All these statistics, from NAR economist Lawrence Yun, paint the picture of a national market starving for supply and vibrating with demand. The Manhattan market has just experienced its 19th week of logging more than 30 contracts signed for over $4 million; there is no precedent for this number at any time since before the 2008 recession.
Apparently, the naysayers writing that New York was dead prognosticated prematurely (sorry, James Altucher, Jerry Seinfeld was right.) In fact, the city displays a glorious history of bouncing back from disaster: the real estate market took off in January 2002, less than four months after 9/11, and again in late 2009 and early 2010, considerably in advance of when the rest of the country began to recover from the 2008 recession. This time, as cities nationwide found themselves as epicenters of the first wave of the COVID-19 outbreak, many New Yorkers left town, ostensibly never to return. Of course, now everything looks different. After a school year in the Hamptons, or Westchester, or Fairfield County, many people are finding that they miss their former lives. Unfortunately for those who gave up their city homes, finding replacements has proven difficult.
Buyers are bearing the brunt of this run on real estate. In an environment in which two weeks on the market seems like a long time to many agents who see their listings scooped up in a matter of days or even hours, buyers and their agents need to be both quick and aggressive to succeed. Last summer it was unimaginable to consider that, just a year later, there would be such eagerness to acquire urban real estate that desirable well-priced properties would sell in a day or two. And while this enthusiasm began six months ago with New Yorkers trading spaces, the market in the second quarter has welcomed national and international buyers, absent since before the pandemic, as well.
As always, the market does not spread its gifts with equal generosity. Especially in the more expensive price categories, condo sales far outstrip co-op sales in both quantity and price per square foot. While the area below 14th Street has been particularly hot for condo sales; on both the Upper East and Upper West Sides, newly constructed super-luxury buildings see inventory flying off the shelves. Meanwhile, co-ops at $10 million and above languish, often for months, since the new generation of ultra-wealthy buyers feels ambivalent about the strictures placed around co-op ownership. Not to mention the fact that newly built apartments tend to be move-in ready, requiring only decoration. Their prewar counterparts in the co-op market, however, usually need some work, and often a soup-to-nuts renovation involving wiring and plumbing, bathroom and kitchen remodeling, and expansion of what is frequently inadequate closet space.
While today’s hot national market may seem like a bubble, it’s not. Google reported in April that the search “When is the housing market going to crash?” had spiked 2,450 percent over the preceding month. Several factors have contributed to the spike in home purchases coming out of the pandemic. First, people throughout the country think differently about their lives now. They need a home office. They anticipate spending less time in the office, so space at home, both inside and outside, has grown in importance. Second, new home construction has lagged in recent years, and more and more older people are aging in place. Taken together, that means fewer properties are on the market at a time when demand is spiking. The supply/demand equation is tilting sharply towards demand.
How long will this last? Almost certainly through 2021. In New York, the upward price creep has begun, especially for units priced under $5 million and the hottest new condominiums. So buyers, act fast and be bold. It may be some time before you see today’s prices again.