Luxury Manhattan real estate market activity during the first quarter of 2022 showed that luxury buyers are still enamored with the city that never sleeps.
“After a red hot 2021, many wondered if the Manhattan apartment market could sustain that momentum into 2022,” Brown Harris Stevens’ CEO Bess Harris Freedman wrote in the brokerage’s quarterly report. “The results so far are a big yes.”
Quarterly market reports released this week from several area brokerages revealed a luxury market in high demand, with climbing prices and little inventory.
Climbing prices yield new luxury threshold
As prices continued to climb, the first quarter of 2022 saw an increase in Manhattan’s luxury threshold (or the top 10 percent of sales in the market) from $3.5 million during Q1 2021 to $4.4 million in Q1 2022, Serhant. Director of Market Intelligence Garrett Derderian noted in the brokerage’s first quarter report.
For the first time since 2017, the first-quarter average sales price in Manhattan breached $2 million and hit $2.01 million, Compass reported. “This uptick comes when people continue to reevaluate their needs and lifestyle preferences after enduring the pandemic,” the report’s introduction reads. “The average price-per-square-foot jumped by 16.4 percent, indicating that buyers were willing to pay a premium regardless of the size of their dwelling.”
Meanwhile, the Corcoran Group reported an even greater increase in price-per-square-foot year over year, with the metric increasing 19 percent from Q1 2021 to $1,816. The luxury brand noted in its market report that significant demand for condos, prime locations, as well as large and luxury residences drove the substantial increase.
Compass also added that the return of pied-à-terre buyers during this quarter drummed up more interest and urgency in the market.
“People who moved for work to the West Coast are looking to have a place back in New York City as they are successful and may have family or children back here,” Compass broker Tony Sargent said in a statement emailed to Inman. “Work from home allows for longer-term travel, so I’m seeing some of that, where the West Coast buyers are divesting of some properties there as their kids grow up and buying here to be closer to their parents or kids who’ve moved East.”
Driven by condos, luxury contracts outpace greater market
A significant rise in the number of contracts on luxury and ultra-luxury properties in the city also reflected the heat of the first quarter’s market demand.
“The prime and super-prime property markets in Manhattan outpaced the broader market in the first quarter, continuing the trend we saw in 2021 of a supercharged luxury sector,” Derderian told Inman in an email. “Notably, first-quarter contracts for properties asking $5 million or more increased 9.6 percent from this time last year, outpacing the market-wide bump [in contract volume] of 2.4 percent.”
Derderian added that demand in the luxury sector had managed to grow during a period of rising interest rates and inflation due to luxury buyers’ frequent status as all-cash buyers and desire to invest in real estate as a hedge against inflation.
In particular, condos were a driving force in the market during the quarter, as “sales continued on a tear,” as a report from Douglas Elliman put it.
Corcoran’s report showed resale condo sales of $2 million or more increased more than 40 percent year over year, while sales of $3 million or more nearly doubled and sales of $5 million or more nearly tripled.
Meanwhile, Frederick Warburg Peters, president of Coldwell Banker Warburg, noted the coveted status of new condos for buyers at the top of the price spectrum, especially in contrast with co-ops, in the company’s quarterly report.
“The ultra-luxury buyer, spending $10 million or more, wants a condo, preferably newly built and hassle free,” Peters wrote. “Most of the co-ops listed for prices above $10 million sell slowly, frequently taking a year or more and several price cuts before they find a buyer.”
Ultra-luxury properties go most quickly
“Buyers had to move quickly in 2022’s first quarter, as apartments sold 28 percent faster than a year ago,” Freedman wrote in the Brown Harris Stevens report. “At an average of 102 days, time on the market was at its lowest level since the third quarter of 2018.”
High-end luxury properties also spent the least amount of time on market, Serhant.’s report noted. Existing homes that cost $20 million or more sold in an average of 112 days, besting the overall market average of 150 days. On the new development side, the same trend persisted, with homes priced at $10 million or more selling in an average of 92 days compared to the overall new development average of 208 days.
Luxury inventory in Manhattan also fell for the third consecutive quarter, with active inventory down by almost 11 percent from the previous quarter and by 23.3 percent year over year, according to data from Douglas Elliman. The dearth of listings resulted in the second-highest market share of luxury bidding wars within the last five years of the brokerage tracking this data.
On the rental side, Peters noted that following the overall rental market’s resurgence during the second half of 2021, high-end rentals reflected this change during Q1 2022.
“While the higher end rental market certainly requires more time and effort, rentals for $10,000, $20,000, even $30,000 per month are once again scarce and sought after, especially in the prime Brooklyn, Manhattan and Queens neighborhoods,” Peters wrote.
Looking ahead to upcoming months, the brokerages expressed optimism, despite global challenges impacting luxury clients like the conflict in Ukraine, gas prices and inflation.
“The future looks bright for our market, as contract activity has risen sharply the past few weeks to its highest level since May 2021,” Freedman wrote. “With a record $45 billion in Wall Street bonuses paid last year, a recovering local economy, and the expected return of foreign buyers, the Manhattan real estate market is set for another strong year in 2022.”
Derderian also pointed to the return of international buyers as forthcoming in upcoming months, and discounts to buyers as scarce.
“As we move into the summer months, we expect demand to remain strong in this segment and discounts to be minimal for properties priced appropriately. Additionally, we expect more global buyers to return this summer, increasing competition in this segment of the market.”
Compass broker Kelly Robinson said prices would also likely continue to rise for luxury buyers in upcoming months. “Especially in the luxury sector where the buyers are not as affected by interest rates and inflation,” she said in an email from Compass. “The middle of the market and the entry-level is yet to be seen, but those may stay where they are now or decrease a bit in price points.”
Peters said agents should prepare for a busy season ahead.
“The second quarter seems likely to be as busy as the first,” he wrote. “With an increase in inventory likely as April ushers in the spring market and buyers who, in spite of the uncertainties of the moment, want to take advantage of today’s interest rates to satisfy their post-pandemic needs and desires, the stage is set for a busy few months.
“It may be less overheated than at this time last year, but the New York market remains a juggernaut.”