Q2 2021 Residential Sales Report

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Executive Summary: Homebuyers Giving New York City a Vote of Confidence

New York City’s residential sector has provided a much-needed bright spot in
an otherwise challenged real estate market. Homebuyers gave New York City
the ultimate vote of confidence during the first six months of 2021 – buying
homes at a brisk pace and in all five boroughs. Total residential sales volume,
or consideration, more than doubled, soaring from $6.4 billion in the second
quarter of 2020 to $13.3 billion in the second quarter of 2021 - a 109.5%
year-on-year increase. Property sales totaled $23.7 billion in the first six
months of the year, eclipsing the $11.5 billion in the first half of 2020. The
second-quarter total was the largest quarterly total since Q2 2017.

This year’s resurgent sales put to rest talk about a mass exodus of residents
from New York City. The lure of the City – its unrivalled culture, dining,
and status as a center of talent and excellence for multiple industries – is
alive and well. Living in New York City has long come with its challenges,
such as exorbitant costs of living and long commute times. The pandemic
underscored many of these chronic risks. It also highlighted vulnerabilities
that had been forgotten for decades, such as public health and safety, and
the dependency of the transit system and some retail on daytime commuters.

Best Year Ever

Strong residential sales attest to how far conditions have improved since
mid-year 2020. Despite the turnaround of 2021, concerns are still justifiably
elevated. In REBNY’s most recent Broker Confidence Index, residential
brokers expressed concerns about pandemic-associated challenges as well
as recurrent problems such as changing city and state leadership, taxes, and
interest rates. But more so than their commercial counterparts, residential
brokers expressed optimism. Some in fact even described the start to 2021
as “their best year ever.” This phrase would have seemed unlikely in the
summer of 2020, but became more prevalent as 2021 progressed.

Window of Opportunity Closed Quickly

Conditions have improved enough in many locations that a few brokers
are discussing tightening supply and rising prices as a potential curb to
sales in the coming months. The window of opportunity for buyers has not
closed completely, but it is clearly not as wide open as in early 2021.
Buyers can still find discounted pricing and units that have not been
available in decades, particularly in Manhattan. As of the second quarter
of 2021, the average Manhattan condo closing price was down by 9.6%
from a year ago. Excluding Manhattan, the average condo closing price
was up by 5.0%. The average 1-3 family home closing price in Manhattan
was down 11.1% year-on-year. In contrast, in the boroughs outside of
Manhattan, the average closing price for a 1-3 family home rose by 7.9%
year-on-year.

Active listings peaked in 3Q2020 and have since dropped by 17.7%.
Citywide there are still 8.1% more listings than in 2Q 2020. Brokers who
have worked through several different cycles know just how quickly this
market can turn and listings can be depleted.

Surge in Sales Boosts Transfer Taxes

In addition to giving the city a vote of confidence, the doubling in sales
provided New York State and New York City much-needed additional tax
revenues. Based on first-half volume of $13.3 billion, New York City and
State transfer taxes totaled an estimated $1.5 billion, an 84.6% increase
from the $834 million in the first half of 2020.1