If you’re waiting for the bottom of the market to invest in property, keep waiting. For the past two and a half years, the New York City real estate market has experienced a steady decline.
Decreasing home values in the city can be attributed to the decrease in demand for homes, and the endless addition of new construction throughout the city. This has facilitated a leftward shift, which is defined by decreased demand at every price point within the market.
Brown Harris Stevens’s top broker Lisa K. Lippman says that she expects
“Increased negotiability and properties trading at lower prices.”
This can be attributed to the properties that had been listed for a period of time even prior to the pandemic, and sellers who have been carrying two properties and cannot afford to continue doing so. Those sellers will be more open to varying offers (a buyers’ market).
Considering that prices had been falling even prior to the new conditions presented by the covid pandemic and looming economic doom, the situation could be the worst nightmare for those who are deeply leveraged within the New York City real estate market.
Since the covid pandemic hit the city, the number of sales have dropped by 55 percent, the largest decline seen in thirty years. The median home price has fallen to $1 Million or 17 percent which is the largest drop in a decade. But homes in New York City are still extremely expensive.
Normally buyer demand can be measured using the number of contracts signed. But since realtors have endured three months without the ability to conduct in-person listing tours, the number of signed contracts is down 76 percent compared to June of 2019.
New Yorkers who were looking to buy or sell in early spring were likely curtailed by stay at home orders, and have had to wait. Pent up energy from motivated buyers and sellers should likely initiate movement within the market as businesses start to re-open. The industry hopes that this jolt of movement within the market triggers more activity into the fall.
So what can we expect following the worst two quarters for New York City real estate in decades? The answer might be difficult to stomach. Although it may seem like the market has started moving quickly again, it has not.
In fact, 90% of the sales that were recorded in the second quarter were actually from contracts signed before the pandemic shut the city down. This indicates that there are very few new sales, and also tells us that the worst may be yet to come.
The future is unknown as the trajectory of the pandemic seems more unpredictable than the stock market in recent days. Experts have begun weighing potential inputs that may determine the future of the market. Director of sales and rentals at Time Equities, Javier Lattanzio believes that the market for the second half of the year depends on schools.
In the seemingly unlikely event that schools do reopen in September, he thinks there will likely be a noticeable influx of sales and purchases. If not, the stagnation is likely to continue.
It seems too early to tell where things will head, but at least we know what to expect from a few possible situations.
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