By Anna Bahney, CNN Business

Manhattan real estate is back and booming. In 2021, prices were near record highs and sales were higher than they had been in more than three decades.

The Big Apple was hit hard at the start of the pandemic. Prices fell and business activity slowed. But Manhattan came back strong in 2021, with the highest number of co-op and condo sales in 32 years, nearly double that of 2020, according to a report by brokerage firm Douglas Elliman and appraiser Miller. Samuel.

The median selling price of a condo or co-op in 2021 rose 7% from a year earlier to $1,125,000, the second highest price in the report’s 32-year history. Manhattan prices peaked in 2017 at $1,140,000

This strong performance is a sign that people feel better about living in the city, according to Jonathan Miller, president and CEO of Miller Samuel.

“2021 started with high vaccine adoption rates, which sent a signal that it was safe to be in town and sales took off,” Miller said.

He noted that the city’s housing market is about six to nine months behind what happened in the suburbs. “The city is now doing what the suburbs did before it, which is booming,” Miller said.

But unlike markets across the country which have record inventory, Manhattan’s inventory is on par with historic standards, with a 5.3 month supply of homes.

However, Miller does not expect this level of supply to last. Elevated selling activity in Manhattan is being fueled by buyers racing against time to secure a low mortgage rate before it rises further, he said.

“2021 has set many sales records and yet the office towers are still two-thirds empty,” he said. “The market is expected to tighten and that’s before we see more office workers returning. 2022 will be a year of high sales volumes, a higher share of bidding wars, a sharp drop in ad inventory, and higher prices.

Bidding wars are making a comeback

The days of “Covid discounts” and “pandemic rates” in Manhattan are long gone, Miller said.

Manhattan saw more modest price increases last year than hot real estate markets like Austin or Boise, where median year-over-year prices rose 40% and 30%, respectively, according to Zillow.

Prices in Manhattan either fell or didn’t rise much from 2017 to 2020, according to the report. As the pandemic approached, the upper end of the market had gone soft.

“Then we have this unexpected boom after a frozen market,” he said. “And now the upper end [of the market] is well ahead of pre-pandemic.

Over the past decade, sales of larger, more expensive apartments — those with four or more bedrooms — have grown at least twice as fast as any other size apartment, according to the report.

“The driving force behind this was that the higher the income, the greater the mobility, and there was a lot more movement at the top end of the market because those buyers and sellers are more mobile than the lower earners, for which the economic impact of the pandemic was far more punitive,” Miller said.

And competition, measured by bidding wars, is intensifying, Miller said.

“There is intensity in the Manhattan market, but it’s not at the levels we’ve seen in the suburbs,” Miller said.

The number of bidding wars in Manhattan had topped 9% by the end of the year, according to Miller.

“A typical amount is 5% to 7% of transactions have bidding wars. The high was 31% in 2015,” he said. “Bidding wars are slowly increasing around New York. A high volume of sales is expected and stocks will not be able to keep up, which will drive prices up this year.

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