Before the COVID-19 pandemic struck New York City, the real estate market was considerably different than what it is now. In the United States, the New York City residential real estate market has been one of the hottest for several years, boasting some of the most expensive properties in the world. The market was also booming year-over-year. This is due to the high demand for residential real estate as more and more people wish to live in the city, which favors sellers in the city.
Over the past 5 years, prices of homes in New York City have appreciated by almost 30%, with an appreciation rate of slightly over 1% in the latest quarter. This translates into an appreciation rate of 4.41% per year. The median tipping point in New York is about 5.8 years, while the national tipping point is 2 years. This is because houses in New York City have higher prices, meaning that owners tend to stay in one house for much longer.
Last year, the median sales price increase by 5.7%, the number of pending sales increased by 3%, and there was a 1.1% decrease in closed deals. At the beginning of 2020, the city saw a surge in activity in the housing market, with a significant increase in sales. Experts predicted that this year will be one of the strongest for the residential real estate market.
Although the first quarter of 2020 was profitable for people selling residential properties, the spread of COVID-19 in March slowed down activities. Until the mid of March this year, pricing or transactions were not majorly affected but the end of the month resulted in a decline in home sales and new listings. Inventory was also impacted and saw a 10.4% decrease.
However, regardless of a decline in transactions, prices remained unaffected during the first few months of the pandemic. Positive pricing trends were observed, and the median sales price of houses was also relatively stable in comparison to the rest of the nation. April also saw a 5.48% year-over-year increase in median sales prices, and a 4% increase in median sales price was seen in May in comparison to the same time last year.
In June, one of the strongest trends in sales were observed, with the first week of the month being impressively active in terms of sales. In the second week, however, there was an 11%year-over-year decrease in median sales price, making it lower than the figure seen last year. Nonetheless, June had the highest weekly median sales price this year, which was only 2% lower than it was in 2019. Sales activity continued to thrive in July as well, with over 500 transactions seen for the first time in months.
A month later in August, over 15,000 apartments were vacant in Manhattan alone as more residents left the city amidst the pandemic. This borough saw a vacancy rate of over 5%, which has not been seen in the past 14 years. Brooklyn’s real estate market has been performing better, as people living in Manhattan are looking for houses in Brooklyn.