Based on New York City real estate’s last quarter of 2020, the luxury sector of the market is expecting to thrive in 2021. Sales of homes that cost more than $4 million increased slightly when compared to how they were selling this time in 2019; a surprising shift in the market considering we’re currently in the worst phase of the Covid-19 pandemic yet.
Donna Olshan is the president of luxury real estate broker Olshan Realty who claims this increase is partially due to “a demand that was never met because we lost the most important real estate quarter to the pandemic – the spring. The upward tick also occurred because most of these sales are [to] New Yorkers, or from the New York metro area, betting on the home team. They are getting Covid-19 discounts, they’re looking at the long-term prospects of New York, and they’re buying.”
Jonathan Miller is the president and chief executive officer of Miller Samuel appraisers who thinks that NYC will see a major uptick in sales in 2021 because while many made the move to the suburbs during the pandemic, that craze will soon be over as the world begins to reopen.
“The way I think of the suburbs is that they had their moment. The ‘fleeing the city’ narrative is already extremely dated. While suburban sales are still up year over year, it’s just no longer a rocket ship of growth.” Miller also believes that this over-saturation of individuals in these suburbs are going to drive those markets way up, along with the prices of property. “And the jump in pricing, largely caused by what I would call panic buying—where people left the city out of fear—that was front end-loaded, and I don’t see a compelling reason why that [price growth] can be sustainable.”
Olshan believes that Brooklyn in general will stay as hot on the market as it has been; the pandemic hasn’t really impacted the real estate in the borough. “Luxury” real estate in Brooklyn is also much “cheaper” when compared to what’s considered luxury on the Upper East Side. Any home over $2 million in Brooklyn is considered luxury, which according to Miller is the main reason the area is so popular.
“Brooklyn is certainly accelerating, and I don’t see any reason for that to stop I mean a million dollars buys you more space, and once you get into that luxury sector, that value grows quite a bit.”
Foreign buyers investing in luxury New York City properties throughout the pandemic have certainly helped keep the industry, and economy, afloat, however, this has also caused the pricing to increase exponentially, and considering we’re in the middle of one of the worst economic disasters in US history, less American investors are likely to purchase these properties.
In Manhattan this will especially be an issue considering how large the luxury condominium market is now in the borough, which Miller describes as being “burdened with a tremendous amount of supply.”
“In 2020 we had 8.7 years of sellout, meaning it would take 8.7 years to sell all unsold Manhattan new-development condos. That is likely to drop to 7.2 years in 2021, because there’s an anticipated decline of new products coming into the market. Plus, additional sales will occur as buyers are drawn by discounted pricing. I think in 2021 we’ll see a continued drop in price trends.”
The next few months will be determined by how well the economy is able to recover with the new Covdi-19 economic relief packages, as well as how the country begins to recover with the rollout of two vaccines.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at email@example.com.