Not since the bleak days of the Lehman Brothers crash in September 2008 and the subsequent fallout into March 2009 has the Manhattan luxury real estate market experienced such an unpredictable and disruptive impact as the Covid-19 Pandemic of 2020. After all, let's not forget that the Coronavirus blew a hole in the entire Spring market with a New York State lockdown that prevented showings from March 22 to June 22.

As a result, 2020 ended with a 31% decrease over 2019 in the number of contracts signed at $4 million and above in Manhattan. Year-to-date, 645 contracts have been signed totaling $5,082,652,981. It was the lowest total since 2011 when 582 contracts were signed.

Drilling down through the numbers, a couple of things stand out: The average price drop from the original asking price to the last asking price was 12%. The average days on the market swelled to 586 days from 496, mostly because developers were reluctant to discount inventory, often at their own peril.

To recap the downward arc over the last three years: The air started to come out of the luxury market once January 2018 hit with a change in the Federal tax law that capped state, local, and real estate tax deductions at a total of $10,000. In addition, mortgage interest was capped on new purchases up to $750,000. Further downward pressure was exerted in 2019 when New York State decided to raise mansion and transfer taxes along with onerous changes in the rent laws that discouraged investors.

But the Pandemic was something else: A Covid shutdown sent buyers running for the Hamptons, suburbs, and beyond. It was more drama than any market could withstand as Manhattan sellers started slashing prices. By Summer, a handful of intrepid, opportunistic buyers slowly emerged, riding the back of lower prices, low interest rates, a rebounding stock market, and the belief that New York would return to its glory days.

This set the stage for an uptick in the fourth quarter, which registered more signed contracts than over the same period last year: 232 contracts vs. 229 in 2019. So far, this year's 4th quarter volume total is $1,872,114,484 vs. $1,784,083,999 in 2019. This is not to imply that the 4th quarter's performance will extend into next year's first quarter. After all, we live in unpredictable and disruptive times.

Olshan Realty wants to wish all of you Happy Holidays and please Stay Safe!!

CLICK HERE To View the Olshan Luxury Report for the week of December 14-20, 2020.