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Manhattan Luxury Real Estate - Q1 2022 Market Update

04/13/22  |  Tony Sargent

Who's Buying In Manhattan Right Now?

WHO's BUYING LUXURY PROPERTIES IN NEW YORK?  Despite domestic and global variables creating market volatility in equity markets, rising mortgage rates and inflationary pressures, the New York / Manhattan luxury real estate market continues to flourish with high demand from both local and domestic buyers looking to own a piece of Manhattan. For some it's a desire to expand post-pandemic into larger homes with more room for everyone, as work from home becomes split between office time and home time. For others, it is a migration to New York for the first time, because work-from-home opportunities provide the chance have a lifestyle of your choice, vs. being forced to remain domiciled in one city primarily for most of the year. 

TECH IS GROWING: The Tech and Fin-tech sector also is growing in New York, and we are seeing quite a bit of tech entrepreneurs as well as developers and engineers moving here from the West Coast or other areas, to call New York home. In the $6-15M+ market I am seeing many buyers looking for 2nd, 3rd, or 4th homes. The very volatility that is stressing some markets, is driving a desire for diversification of portfolios by the ultra-wealthy, and luxury real estate offers both a longer term secured investment while offering the buyers a chance to move between multiple homes on the West Coast, Idaho, Wyoming, Austin, Miami, and New York over the course of each year. 

BOOMERS: Over the last 2 decades, baby-boomers / empty-nesters made up much of the domestic 2nd Home market buyer in New York. They gravitated to 1-2 Bedrooms for their families to enjoy, and many times it was spurred on by a long-held dream of a New York residence or having grown children working in New York. The luxury sector included a heavy dose of international buyers. While some are returning, many of the sales in the luxury sector have been going to domestic buyers who are younger affluent business / tech entrepreneurs who've created and sold companies.  When speaking with a new buyer recently who's looking for a $5-10M 2-3 Bedroom downtown, I asked "Why buy? Why not rent or stay in a hotel?"  Their answer: "Many of my friends are now also in New York, so I want to spend the shoulder seasons there and enjoy New York with them. I don't want to stay in hotels - it's too impersonal. I like the idea of having my own place, and from an investment standpoint, I have access to super low loan rates due to strong financials. It just makes sense to buy. 

Q1-2022 SALES AND CONTRACTS: Following up on a strong 2021,  Q1 2022 sales rose significantly over 2021. The Q4 contract activity that drove Q1 sales numbers were as strong as the spring market, which is unusual. Omicron tempered that activity for late December and January, but February has jumped back in terms of contracts signed for the $4-10M market.  The over $10M has been a bit more tempered, though it's picking up again. 

LUXURY RENTALS: The overall rental market is incredibly tight with a record 0.5% vacancy rate, causing rents to spike 25-40% for some properties which had Covid era leases. The luxury and ultra luxury market is especially inventory shy. Recent searches for clients looking in the $25-60K per month category, shows prices for some active listings at $15-25K above 2021 asking prices. Expect multiple bids and off-market deals. 

FORECAST: I expect that the luxury market may settle down in the 2nd half of 2022, however for the next three months, buyers need to move with agility to secure the best homes and sellers need to make sure their homes are well-presented and well-priced to obtain that much desired multiple bid. Be strategic and you will win.  - Tony Sargent
 

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