JAM News
Wednesday, November 11, 2020

Pricey neighborhoods see deep discounts on homes

CRAIN'S - Natalie Sachmechi

Covid-19 discounts in some of the city's priciest neighborhoods, such as SoHo and Tribeca, are a signal for home shoppers that it's the time to buy. 

They're scooping up multimillion-dollar apartments in the coveted neighborhoods at up to 10% below the asking price now that they're packing more negotiating power amid a major market slowdown, according to StreetEasy data.

Of the nearly 7,000 deals that closed on homes in the city between March and September, more than 5,000, or 74%, were sold below the asking price. During the same period in 2019, 71% of homes closed below the asking price, as did 64.5% of homes in 2018.

With softening prices, nearly 20% of buyers were planning to move within the city to take advantage of the discounts, the data showed, with a diverse group of neighborhoods reporting the highest discounts.

Midtown saw the steepest price cuts of any area in the city, with a 12.4% discount, now that the demand for homes near office buildings has shrunk because of people working from home. 

“It may be causing some to second-guess the value of living in Manhattan’s most central neighborhoods,” StreetEasy economist Nancy Wu said.

A number of the city’s pricier neighborhoods also made the list of most heavily discounted neighborhoods, including Jamaica Estates, where discounts hovered around 11%; Tribeca, with a discount of 10%; Flatiron, Dyker Heights and SoHo, in the low 8% range; and Brighton Beach, at 7.6%.

The median sale price in both SoHo and Brighton Beach was $2.1 million; Tribeca homes fetched $3.9 million on average.

More than 82% of Flatiron and Tribeca homes sold below the asking price, as did 90% of Jamaica Estates homes and 92.3% of Brighton Beach listings.

“Buyers are flocking toward deals where they have more negotiating power,” Wu said.

The neighborhoods with less demand and, therefore, higher discounts were closer to Manhattan.

Expensive areas weren’t the only ones to see the highest discounts, the data showed. Three spots on the list were taken by neighborhoods with sale prices below the citywide median: Jamaica, Elmhurst and Sunset Park. 

Elmhurst was one of the neighborhoods hit hardest by the pandemic, according to city data, which could have made people more reluctant to move there.

“Property owners know they will have to offer some incentives because of Covid-19,” Wu said.

Another reason discounts were high in these areas could be that people looking to move farther away from central office areas are overlooking some of these outer-borough neighborhoods in between.

“There are very few neighborhoods experiencing bidding wars in New York City,” said Wu, “and we don’t expect that to change anytime soon.”

Only five neighborhoods in the city reported sales over the asking price, thanks to their affordability and spaciousness: Downtown Brooklyn, Flatbush, Gowanus, Greenwood and South Jamaica.  

These were buyers who might have been looking to buy in Manhattan before the pandemic, but they chose instead to invest in these neighborhoods, where there are new developments and some highly desirable properties, Wu said.

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