Buyers in search of outdoor space and privacy are returning to the city’s classic townhouse stock
BY VIRGINIA K. SMITH | ORIGINALLY PUBLISHED ON JUNE 20, 2021 | MANSION GLOBAL
Townhouses have long served as status symbols in New York City’s luxury market, but in recent years, facing stiff competition from amenity-packed condo developments, sales have slumped and prices have softened.
That trend may be abruptly turning around, thanks in part to pandemic-driven demand for privacy, square footage and coveted outdoor space. Five townhouse contracts for homes priced at $4 million or more were signed in Manhattan in the first week of June, according to the Olshan Report from that week, making a year-to-date total of 95 townhouse deals, the highest volume since the period from January through June 2015, when 72 deals were closed.
“The only conclusion I can draw is that this big uptick in townhouse sales in New York is related to the pandemic,” said Donna Olshan, president of Olshan Realty and author of the report. “People are looking for large space and with that, self-contained privacy, not dealing with other apartment owners or sharing elevators. They want to have their own house, amenities, and garden, and they’re willing to pay for that.”
Part of the flurry of activity is likely attributable to pent-up demand from 2020, when much of the city’s real estate market was temporarily on pause.
“We had six months where nothing happened last year, so there’s naturally going to be pent-up demand,” said George Vanderploeg, a broker with Douglas Elliman in Manhattan. “We also saw that after the financial crisis in 2008. There were months of no activity, then big demand after that.”
Buyers who would have once gravitated toward luxury condo buildings have also turned their attention toward the townhouse market, and even as Covid-19 infection rates drop and pandemic-related restrictions lift, that trend may not immediately reverse itself.
“I’ve never seen as many apartment buyers looking for houses as I’ve seen now,” Mr. Vanderploeg said.
With the shifting definition of luxury over the past year, affluent buyers may continue to be less interested in traditional amenities than they are in factors like space and safety.
“Buyers in the $5 million, $10 million range saying ‘we want amenities’ aren’t necessarily looking at the townhouse market,” said Kobi Lahav, senior managing director of Living New York. “But especially after the pandemic, you had a whole year where you couldn’t use those amenities, and getting into an elevator was risky. And for the cost of holding a $10 million apartment and paying common charges, you start to think, ‘why not take care of my own townhouse.’”
The uptick in activity has centered around ever-popular neighborhoods like the West Village and other parts of downtown Manhattan, Mr. Lahav said. Activity has been slower to rebound uptown, however.
“By September, at the latest next March, you’ll start to see it on the Upper West Side and Upper East Side,” he added. “Those are neighborhoods that suffered a lot in the pandemic.”
In spite of their high price tags, townhouses also now represent a relative bargain in the context of the New York City luxury market.
“These properties have been depressed for a long time and there’s a lot of value in them,” Mr. Lahav said. “Everyone in the $6 million-plus range is asking if they should look into townhouses. Upper East Side townhouses that five years ago were going for $8 million or $9 million are now going for $5 million or $6 million, and there’s no way that won’t go back up, so there’s value there.”
Townhouse prices most recently peaked in 2017, and “today we’re at about 20% below those peak prices,” Mr. Vanderploeg said, adding that such homes have lost about 10% just since the onset of the pandemic. “But sales are strong, so at some point, prices will begin to firm, and that may even be happening now.”
While big-ticket townhouse deals including the $50 million sale of disgraced financier Jeffrey Epstein’s former Upper East Side home can skew price statistics and grab headlines, much of Manhattan’s market is now driven by smaller sales, many of them to families preparing for children to return to in-person classes in the fall.
“There are a lot of little deals happening under $6 million, under $5 million on the Upper East Side and in Carnegie Hill,” Mr. Vanderploeg said. “There’s very broad demand. Apartment people all of a sudden are discovering townhouse living, and I think that’s going to continue.”
Ms. Olshan added, “There’s a finite supply of these houses, and I feel that in the long term, the house market is a good place to invest in New York.”
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