Some weeks ago, New York State declared that the work of real estate agents is essential only when “legally necessary” and, as such, only virtual showings are allowed. However, as of mid-March most New York City’s residential buildings closed to non-residents, so for the most part all showings stopped. This shutdown will continue until the City reopens and buildings allow us to enter apartments and homes once again.
Many people who own or wish to buy a home are wondering where the market is now and what the future holds. There is currently limited data, but we have culled the information that may help you understand what is happening in the Manhattan real estate market and have provided answers to questions which we have been asked on a regular basis, by both buyers and sellers.
- Was the market getting stronger before the shutdown? Yes, it was improving. In the Fourth Quarter 2019, contracts signed rose for the second consecutive quarter for the first time since 2015. November and December were particularly strong with December contracts up nearly 15% from the previous year. Volume of contracts signed continued to increase in early 2020: by mid-March closings and contracts signed were up 10% versus the same period in 2019. Lower pricing, record-low mortgage rates and what was a strong economy helped unlock pent-up demand.
- Have contracts been signed since mid-March? Yes, some contracts are being signed, in total 260 since March 23rd in all of Manhattan. But sales volume is down between 74-100% depending on the price point, size and location. Note: So far, nearly all contracts that have been signed were on properties which buyers had visited prior to the shutdown. See chart below.
- Are people buying properties without visiting them? In resales, the number of contracts signed by people who did not personally visit the apartment is quite low. However, in new development sales (where many people buy based on viewing plans and images in normal times), the numbers vary from 10-20% of the sales per Corcoran Sunshine. Please note that the contracts for new development have been signed since mid-March, have primarily been below $4M.
- What is happening to prices? What about the future? So far it is hard to tell. Recent closings help determine the most current pricing. At the start of the shutdown, very few closings transpired as it took some time to figure out how to manage a virtual closing. Now that some closings are occurring, they are showing on average – a minimal decline in prices. Appraisers and experts predict a 3-5% decline in lower end sales and 5-10% decline in the higher end.
- What types of properties are going into contract now? The majority of apartments going into contract are below $2.5M.
- What about closings? As stated above, closings are in fact taking place, some with great difficulty. Condo closings tend to be easier. Issues include: buyers do not want to close if they cannot move into the apartment, co-op closings are very hard to complete because they require the managing agent at the closing and some banks are unwilling to perform a virtual closing.
- Are people renegotiating prices? So far, our research has shown that some buyers are renegotiating prices prior to closing. Those who are not renegotiating often believe that if they plan to own the apartment for at least 5-7 years, anything lost will be made up. There are others who need to sell their current home and feel that they must make up their loss by renegotiating their purchase price or are requiring more time to close.
- What do you think the future holds? While it is anyone’s guess, I am hearing both positive and negative sentiments. It is much easier to deal with absolutes rather than the uncertainty we are currently experiencing. While it may take some time, indications are that by mid-summer the City will begin to reopen and a more active buying and selling season in New York City real estate will begin.
Time and again, New Yorkers have proven themselves to be tough and that drive will bring the City back and it will thrive again. New York City has its own unique spirit which is why our home is such a special place!
If you have any additional questions, please do not hesitate to reach out to me and/or our exceptional team members. We closely monitor the market and regularly offer buyers and sellers the benefit of our long experience having worked through a myriad of cycles.
Please stay safe and keep your spirit strong!
Deanna, Ileana, Jane, Cindy, Lynn and Stacey