In Manhattan, the buying spree continued into Q1, likely fueled by escalating rents, a desire for more space, impending interest rate increases, and the continued return of pied-a-terre buyers (including foreign buyers). Borough-wide, condo and coop sales were 35.8% higher year-over-year, a Q1 record, reaching over $7B in total sales volume. Discounts also continued to fall, down to 5% from 6% in Q4 2021 and 10% in Q1 2021. 

Median and average sale prices were up substantially year-over-year (14.6% and 24.9%, respectively) and also compared to the last quarter. For the first time since 2017, average sale prices surpassed the $2M mark, driven largely by condo sales which were up 47.3% year-over-year. The data shows buyers are buying larger apartments and also paying more per square foot. 

In Brooklyn, strong demand coupled with very limited inventory – a combination we’ve grown accustomed to – again resulted in higher sale prices and correlated market forces (fewer days on market and almost no discounts/ negotiability). Anecdotally, our Brooklyn buyers have been involved in bidding wars across almost all price points and product types this quarter (1-bedrooms to townhomes), and the market shows no signs of slowing. The average sale price hit $1.18M in Q1, the highest ever for a Q1 in Brooklyn, and a massive increase year-over-year. Active inventory in Brooklyn was down 6% year-over-year and 3% vs. Q4 of 2021 and even more (in the double digits) for coop and condos, specifically. 

The strong Q1 market indicators across both Manhattan and Brooklyn come as no surprise, and any decreases from Q4 are likely attributable to seasonality rather than market forces. Supply continued to be extremely limited this quarter, so we expect the upward trend in prices and accompanying decreases in negotiability/days on market to be even more pronounced in Q2 (when Q1 contracts close.) 

Whether we have plateaued or these increases will continue past the first half of 2022 will depend on a combination of whether supply remains at these historically low levels and whether buyer demand will remain in the market despite the challenging market conditions. While rising interest rates and conflict abroad have thus far not seemed to curb the momentum in the NYC market (possibly due to increased liquidity from well-timed investments in the stock market in recent years and strong Wall Street bonuses), it is hard to predict how these factors will evolve and at what point they might curb the market. The midterm elections may also play a role in the Fall as political uncertainty generally translates to a short-term decrease in transactions, but for Q2 we expect all market indicators will remain strong.

(WSJ)