Coronavirus halted Manhattan real estate sales in March

Manhattan real estate sales ground to a halt at the end of March, and some industry experts say prices could fall 30% or more once activity resumes.

Total sales volume actually increased 14% for the first three months of 2020, boosted by a strong January and February, according to a report from Douglas Elliman and Miller Samuel. But the average sale price for a Manhattan apartment fell 11% in the quarter, to $1,887,740.

The last two weeks of March, when the coronavirus began to really hit the New York area, showed a market suddenly in shock. According to Olshan Realty’s market report, there were only two contracts over $4 million signed in the last week of March — the worst week since August 2009, when the financial crisis rocked markets.

The biggest sign of trouble is listings. The number of new listings in the last week of March plunged 85% compared with the same period a year ago, according to UrbanDigs. Sellers also pulled existing listings off the market, since buyers either can’t or don’t want to view apartments amid the outbreak. The number of listings coming off the market jumped by 68% on a year-over-year basis, according to UrbanDigs.

UrbanDigs said it expects a “thinly traded, temporarily disclosed marketplace as spreads between buyers’s bids and sellers’ asking prices widens.”

A pedestrian walks past a Sotheby’s ‘For Sale’ sign displayed outside of a townhouse in New York.

Craig Warga | Bloomberg | Getty Images

The big question is what prices will look like when the market starts to recover — either in summer or fall.

Manhattan real estate sales and prices were already in the midst of a two-year slide before the coronavirus pandemic, with an oversupply of condos, tax changes and lack of foreign buyers all hurting sales.

Pandemic and stock market declines are likely to cause another drop. Jonathan Miller, CEO of Miller Samuel, said median prices during the financial crisis and the 9/11 terrorist attacks fell anywhere between 25% and 30% for a short period, from market highs to market lows.

“We could see something comparable this time, it’s certainly possible,” Miller said. “You could argue the two earlier events had more definable timelines. This time, we don’t know how long it will last. At least after 9/11 you could see light at the end of the tunnel shortly after the event itself.”

New developments could be hit particularly hard, especially the large new condo towers that have sprouted up across Manhattan and were counting on the spring selling season to move units and pay down construction and inventory loans.

According to Douglas Elliman and Miller Samuel, prices for new development in the first quarter fell by 49%. There’s now a 17-month supply of new development.

What’s more, the coronavirus could lead New Yorkers to reassess the costs and benefits of living in New York City and look for homes in more rural or suburban communities, perhaps in other states. An untold number of New Yorkers have fled the city for the Hamptons, Hudson Valley and other locales, and are now adapting to working remotely.

“You have a legion of residents that are living outside the city now,” Miller said. “There could be a sea change in the way people think about remote access and high-density living.”

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