Manhattan residential real estate sales topped $7 billion in the first quarter, marking the strongest start to the year on record, with the market showing no signs of slowing, according to new sales data.
There were 3,585 sales in the first quarter, the highest number ever for a first quarter, according to a report by Miller Samuel and Douglas Elliman. That’s a 46% increase from the first quarter of 2021. Total sales volume jumped 60% to more than $7.3 billion, as lower inventories also drove continued price growth.
The average price of an apartment in Manhattan jumped 19% from the year-ago period to $2,042,113.
The strength came despite rising interest rates, worries about a possible recession and falling stocks, which tend to have an outsized impact on Manhattan’s real estate market given the city’s dependence on vis-à-vis the financial sector.
Nor does it appear that a push for a return to work is behind the increase. Only about 36% of New York workers have returned to the office, according to data from Kastle Systems.
Jonathan Miller, CEO of Miller Samuel, the assessment and research firm, said the assumption that people live in Manhattan because of their work is now being challenged.
“You have a lot of people working remotely, but wanting to be in Manhattan,” he said. “They’re drawn to the cultural offerings, the restaurants, Broadway. Remote work doesn’t just mean the suburbs. There could be as many people working remotely on the Upper East Side of Manhattan as there are in Westchester.”
Rising interest rates are also having less impact on high net worth buyers, who dominate the Manhattan market. As the rates go up, they just pay more money. More than 47% of all real estate purchases in the quarter were made entirely in cash, up from the pandemic low of 39% and closer to the historical norm.
Another reason for Manhattan’s strength in early 2022 was supply. While the rest of the country struggles with a shortage of homes for sale, Manhattan still has a large inventory, albeit in decline. According to Corcoran, nearly 5,000 listings hit the market during the quarter, the most for any first quarter on record. Yet for the first time in five years, inventories fell below 6,000 units.
“With robust sales and rising prices, barring any unexpected shocks, this exceptional first quarter should make everyone very optimistic about another momentous year ahead,” said Pamela Liebman, President and CEO of Corcoran.
The question is how high Manhattan prices can rise before buyers start to forgo deals. The median price of an apartment in Manhattan hit an all-time high of $1,190,000 in the first quarter. The median price for new developments exceeded $2.3 million.
The biggest price gains are at the top. Prices for apartments with four or more bedrooms jumped 31% from a year ago to $6.5 million. As buyers drive up prices, only 20% of apartments sold have cost less than $1,200 per square foot, the lowest percentage ever, according to Corcoran.