The number of signed contracts for Manhattan’s luxury apartments plunged in June as potential buyers try to escape the coronavirus-hit city of New York.
The real estate market in Manhattan has always been one of the busiest in New York City’s five boroughs. However, tables were turned since the coronavirus hit the Big Apple, and New Yorkers fled to suburbs while potential home buyers stalled.
In the latest report published by real estate firm Douglas Elliman, July sales for high-end apartments in Manhattan dropped more than half despite the massive price drop of co-ops.
Signed contracts in Manhattan dive by 57%
As per Douglas Elliman and Miller Samuel, the number of signed contracts for condos and co-ops dived by 57% in July, which is more than half compared to last year’s activity in the same period. The drop in sales also resulted in a surge of apartments listed for sale, climbing as much as 8% compared to July’s rate a year ago.
Separately, the number of unsold luxury apartments now climbed to its highest level in ten years, too, according to Miller Samuel’s CEO, Jonathan Miller.
And that is despite several developers attempt to cut prices, which only shows the luxury segment is getting hit more. Some co-ops even dropped their price down more than 75%, ranging from $4 million to $10 million.
Last month, the recorded vacancy rate for Manhattan apartments had hit a 3.67% mark too. The jump is said to be the highest since the pandemic halts the U.S. economic activity, which accounts for more than 10,000 apartments listed for rent in June.
Overall, Manhattan has a 17-month supply of high-end apartments that are for sale.
New Yorkers flee to suburbs
There are numerous reasons as to why Manhattan’s real estate market is a mess today. But Miller said the pandemic has significantly contributed to the market’s current situation.
He explained that stay-at-home protocols prevented brokers from doing in-person showings. Surprisingly, thousands of wealthy New Yorkers escaped the city to move to suburban areas as well—particularly that most companies shift to work-from-home setup, and staying in Manhattan seems unnecessary.
“The city is less of an anchor now. It is going to take longer for the city to recover than the suburbs,” Miller told CNBC.
On a good note, people fleeing to suburbs caused an uptick in real estate activity in places like Connecticut and Westchester County, with the former seeing the most significant jump.
New sales in Westchester, for instance, reached a total of 987 deals. Signed contracts in Hamptons climbed as much as 267, while the Fairfield County in Connecticut recorded over 1, 200 deals in July alone.