2021 Q4 Market Report

2021 Q4 New York City Real Estate Market Report

Overview:
The fourth quarter of 2021 marked a significant rebound for New York City’s real estate market as the city continued to recover from the impacts of the COVID-19 pandemic. The overall market showed strong demand, especially in the luxury segment, as buyers and renters returned to the city. The combination of rising prices and a competitive market led to a notable increase in transaction volumes across both the sales and rental markets.

Sales Market Highlights:

1. Price Trends:

• Manhattan:
  • The median sale price for condos in Manhattan reached $1.14 million, a 7% increase compared to Q4 2020. This growth was primarily driven by increased interest in luxury properties and new developments.
  • The average price per square foot for condos was approximately $1,670, up 6% year-over-year.
  • Co-op prices also saw gains, with a median sale price of $800,000, reflecting a 5% increase from the previous year.
• Brooklyn:
  • The median condo price in Brooklyn was $850,000, marking an 8% increase from Q4 2020.
  • Co-op prices in Brooklyn also increased, with a median sale price of $650,000.

1. Sales Volume:

• Manhattan:
  • Sales volume surged by 45% year-over-year, totaling 3,800 transactions in Q4 2021. The luxury market contributed significantly to this growth, with high-end properties experiencing strong demand.
• Brooklyn:
  • Brooklyn saw a 30% increase in sales volume, with 2,500 transactions recorded in Q4 2021. The borough continued to attract buyers looking for more space and affordability compared to Manhattan.

1. Inventory Trends:

• Manhattan:
  • Inventory levels declined by 12%, leading to 4,800 active listings by the end of Q4. The decrease in available inventory indicated a tightening market, especially for desirable properties.
• Brooklyn:
  • Brooklyn’s inventory also saw a 10% decline, resulting in 4,200 active listings. This tightening contributed to upward pressure on prices.

1. Luxury Market Performance:

• The luxury market (properties priced above $5 million) experienced a strong resurgence, with an average sale price of $7 million, up 10% year-over-year.
• Cash buyers constituted 42% of luxury transactions, showcasing continued interest from wealthy buyers.

1. Buyer Demographics:

• First-time buyers accounted for approximately 20% of transactions, as many sought to capitalize on favorable conditions before rising rates impacted affordability.
• All-cash buyers represented a substantial portion of sales, particularly in the luxury segment, making up 37% of overall transactions.

Rental Market Highlights:

1. Rent Growth:

• The median rent in Manhattan surged to $3,900/month, reflecting a 12% increase year-over-year as demand rebounded in the wake of the pandemic.
• Brooklyn’s median rent also increased to $2,800/month, marking a 10% increase compared to Q4 2020.

1. Demand for Larger Units:

• The average rent for a 2-bedroom apartment in Manhattan reached $5,000/month, while in Brooklyn, it was $3,400/month. The trend of renters seeking more space continued as remote work persisted.

1. Low Vacancy Rates:

• Manhattan’s vacancy rate fell to 3.2%, while Brooklyn’s vacancy rate stood at 3.6%, indicating a tightening rental market with limited supply.

1. Landlord Concessions:

• Landlord concessions were offered in 55% of new leases, down from 65% in Q3 2021, reflecting improving demand and a more competitive rental market.

New Developments and Construction:

1. New Condo and Rental Units:

• Approximately 1,500 new units were delivered in neighborhoods such as Hudson Yards, Long Island City, and Downtown Brooklyn during Q4 2021, catering to ongoing demand for both luxury and affordable housing.

1. Construction Delays:

• Supply chain disruptions and labor shortages continued to affect construction timelines, leading to delays in several major projects.

Future Forecast:

1. Sales Market Outlook (Q1 2022):

• Sales prices are expected to continue their upward trend, with further increases anticipated in the luxury segment as demand remains strong.
• Sales volume may stabilize as rising interest rates begin to influence buyer sentiment.

1. Rental Market Outlook (Q1 2022):

• Rents are projected to rise by 3-4% in Q1 2022, driven by sustained demand and limited inventory.
• Vacancy rates are likely to remain low as competition for rental units continues.

1. Key Market Drivers:

• Interest rates will be a significant factor affecting buyer behavior, particularly among first-time buyers.
• New developments are expected to help alleviate some inventory shortages, although construction delays may persist.

Key Numbers Recap:

• Median sale price (Manhattan condos): $1.14 million (+7% YoY)
• Manhattan median rent: $3,900/month (+12% YoY)
• Brooklyn median rent: $2,800/month (+10% YoY)
• Vacancy rate (Manhattan): 3.2%
• Sales volume (Manhattan): 3,800 transactions (+45% YoY)
• Luxury market average sale price: $7 million (+10% YoY)

Conclusion:

Q4 2021 showcased a vibrant and recovering New York City real estate market, marked by increased sales activity and rising prices across both the sales and rental segments. The luxury market saw significant growth, driven by high demand and limited inventory. As the city continued to recover from the pandemic, the rental market remained competitive, characterized by rising rents and low vacancy rates. Looking ahead, the market is likely to face challenges related to rising interest rates and ongoing inventory constraints, which could influence buyer and renter behavior in the coming months.