2020 Year-End New York City Townhouse Report

The Manhattan real estate market in 2020 was clearly defined by the Covid-19 pandemic. The average sales price in the borough and transaction volume decreased year-over-year by 9% and 45%, respectively. As much of the year was characterized by upheaval, economic downturn, and New Yorkers leaving the City for the space and perceived safety of the suburbs. That being said, certain neighborhoods fared better than others. The Upper West Side, for example, was significantly up in sales and dollar volume, due to the availability of affordable inventory in the neighborhood. The West Village also fared well in 2020, with the average sales price up 21% year-over-year.

Throughout Manhattan, the first quarter and last quarter vastly outperformed the shutdown impacted middle two quarters. 1Q2020 had a strong start prior to the pandemic, while 4Q2020 showed an upward trend as buyers returned to the City with the rollout of the vaccine, the anticipated re-opening of offices and schools and the increased certainty provided by the end of the election. As buyers re-enter the market, townhouses offer a particularly attractive option in the current state of the world, given the privacy and space they offer. There seems to be a new buyer pool for townhouses, made up of purchasers who have migrated from co-ops and condos to single-family townhouses or multi-family conversion opportunities.

While it continues to be a buyer’s market, sellers who price their properties in line with market conditions are likely to invite activity and a faster sale as buyers are ready to transact, in contrast to the decreased interest and methodical approach that characterized the middle of the year.

We are also beginning to see renewed interest in the higher end of the market as eight figure sales have started to occur again throughout the City. In the multi-family sector, cap rates have expanded into the 4-5% range as the rental market slowed in 2020 and due diligence requirements increased as a result of the Tenant Protection Act passed in 2019.

Looking forward, with the City seeking to return to more traditional urban activities as the year progresses, we expect the pent up demand for culture and nightlife will translate into improving rental and sales conditions. The uncharacteristically busy month of December in 2020 is a positive sign for a strong start to 2021.

Brooklyn is back! The pandemic froze Brooklyn’s townhouse market in place in March, but since our market reopened in June, pent-up demand paired with a renewed interest in more space, privacy, and outdoor space has pushed the market forward at rapid pace.

We noticed three trends last quarter and they remain true today:

First, there are more Manhattan buyers in Brooklyn. For years, we have seen the “Downtown to Brooklyn” move from TriBeCa, SoHo, the West Village, Greenwich Village, Gramercy, and Chelsea. Recently, however, buyers from the Upper East Side and Upper West Side have started to pop up in Brooklyn. They’re seeking the open space and air found in Brooklyn neighborhoods, as well as the larger interiors and outdoor spaces that exist in Brooklyn townhouses.

Second, turnkey is king. Renovated townhouses continue to command a premium in today’s market. In addition to rising construction costs, buyers are looking for immediate change. This is found in turnkey townhouses, not in fixer-uppers. The market shows no sign of this demand slowing down and appears to be putting downward pressure on pricing of townhouses that require full renovations.

Third, we are seeing an increasing number of high-end buyers looking in Brooklyn. Brooklyn Heights and Park Slope used to be the two options for luxury townhouse buyers in Brooklyn. Today, we are seeing record numbers in Cobble Hill, Carroll Gardens, Fort Greene, and Prospect Heights. Increasingly, buyers are willing to spend more money in Brooklyn than ever Before. A $25.5M sale in Brooklyn Heights, along with 3 other $10M+ transactions, further proves that Brooklyn is no longer a secondary option for “more space” — buyers with the choice of any neighborhood in New York City are choosing Brooklyn.