One of the most noticeable effects of the New York pandemic was the migration from Manhattan to less crowded suburban neighborhoods and the subsequent boom in the suburban real estate market. Real estate in the city and in the suburbs seemed like a zero-sum game.
"This outgoing pattern spawned the idea that the suburbs had their day at the expense of the cities and that the cities were over," said Jonathan Miller of Miller Samuel, the valuation firm. "It turns out that the assumption that there is a binary relationship between city and suburb is not entirely correct when measured by sales activity."
Mr. Miller contributed data for this week's chart, which shows a schedule of sales activity in Manhattan and the suburb of County Westchester, where activity is representative of that in other suburbs of New York City.
By the end of the second quarter of 2020 – a few months after the pandemic market began – sales in Manhattan had been down around 54 percent year-over-year. In Westchester the decline in sales was around 27 percent. By the third quarter, six months after the pandemic began, sales in Manhattan were up 46 percent year-over-year, while sales in Westchester were up significantly within 1 percent of the previous year. By the fourth quarter, sales in Westchester were about 13 percent higher than a year earlier, while sales in Manhattan were down 21 percent.
Sales in Manhattan were still lagging, but there was steady improvement, and by the first quarter of 2021, transactions in the community were about 2 percent higher than last year. Tracking the quarterly changes in this way shows that sales activity increased in Manhattan as well as in the suburbs. Why does the terrible impression of the Manhattan housing market persist?
"It's an optics problem," replied Mr. Miller. "Corporations haven't called their employees back yet. Think midtown office towers – 80 percent empty and they support street-level retail. When a camera pans across Times Square, all stores are boarded up. But if you're on the Upper East Side have done the same thing even though it is not normal you have people walking around outside eating outside … "
Sales are one thing, but prices are also important. Median sales prices in Westchester rose 10.8 percent year over year in the first quarter of 2021, while in Manhattan they rose just 1.4 percent, which Miller said was due to larger and more expensive units. "In light of this," he said, "pre- and post-pandemic prices are generally down 5 to 7 percent." But these low prices may not last. "Activity leads to pricing, and activity is there."
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