What is happening in the New York City residential real estate market after being shut down for two months? The answer is plenty is changing and no one is quite certain what the market will look like when we reengage and have a more meaningful level of transactions. Without price discovery, our data is largely anecdotal. We know that some sellers have renegotiated their price down by 10-20% in the luxury segment of the market ($3 million and above) but not all have given price discounts. When catastrophic events hit New York City, the real estate market pauses. I was a broker and worked through 9/11 and the downturn in 2008. The time is different. We are in the middle of an unprecedented global health crisis, which has already changed the way we live forever.
Here is how we sell and buy real estate has changed.
- Most properties not only have the traditional on line listing with photos and a floor plan, but they also have video tours and some even have 3D tours. I expect this to be an enduring change. Also look for virtual reality tours to gain traction.
- Board interviews are being done virtually via Zoom and other similar platforms.
- Closings are done more virtually than in the past although there are still some face to face meetings, depending on the banks involved. Closing on a property can take a few days to complete versus a few hours.
- Traditional open houses are most likely a thing of the past with more people resorting to video and FaceTime tours. I suspect this practice will continue as sellers will be reluctant to have strangers in their homes and buyers equally uncertain about entering occupied homes.
- Refinancing applications soared at the end of Q1 2020 and banks couldn’t keep up, so they raised the rates to slow the demand. Those rates have eased back and today mortgage rates remain historically low. The 30-year fixed rate according to Bankrate is 3.43% today.
- Consumer demand was high in the first quarter of the year for NYC and is now very low. We have seen website traffic increase steadily over the past few weeks but actual property inquiries are increasing slowly.
- Inventory is the lowest it has been since the first quarter of 2018, hovering around 6,200 listings in Manhattan.
- Deals are being done. I personally have only done rental deals in the past few weeks but I am negotiating an offer to purchase. I expect to see more activity in the resale market as New Yorkers are able to move about again.
- There will be good opportunities to buy as people get on with life and need to sell for various reasons including: job opportunities elsewhere, needing more space to accommodate home offices or simply downsizing.
- The Q1 2020 report tells us the market was strong when the pandemic hit. We don’t know where the market is going for the rest of the year. I suspect there will be some good values but with supply and demand being roughly on par and the mortgage market in good shape, I am not expecting dramatic price corrections in the sub $3 million market.