NYC Real Estate Market: During & After the Shutdown
Now that we’re more than a month beyond Phase 2 when in person showings were able to resume, it’s time to take a look at what’s been happening with the New York City real estate market.
I’m going to start with what happened AFTER folks were finally able to start seeing properties in person.
Because the numbers for Q2 2020 don’t really tell us where the market is heading since in person showings weren’t permitted until June 22nd – the very last week of the second quarter. So, the Q2 2020 report really only gives us a sense of buyer risk tolerance and seller urgency during the shutdown itself.
So…let’s dig in to what happened after the shutdown ended for real estate.
Not surprisingly, sellers were VERY eager to test the waters once in person showings resumed. According to our internal data, listing inventory in Manhattan skyrocketed more than 220% between June 22nd and July 22nd versus listing inventory for May 22nd through June 21st. And this is a huge jump year over year as well – in fact, there was almost the exact same percentage of an increase year over year as the month over month increase.
Brooklyn likewise saw huge jumps – more than 150% between June 22nd and July 22nd versus listing inventory for May 22nd through June 21st. And also a big year over year jump – more than 200%.
These numbers are certainly eye popping, but it’s important to keep things in context.
In March, April and May, listings inventory dropped to levels not seen in YEARS. In some cases, inventory plunged by as much as 80 to 90% of normal levels. This likely means that the huge jump in listings was not due solely to a large number of New Yorkers who suddenly decided to leave the city. But rather folks who had planned to list in the spring but then decided to wait and list their properties once in person showings were able to resume.
Additionally, the year over year increases in inventory aren’t too shocking either because summer is usually the slowest sales season of the year. In a normal market, sellers are more likely to delay listing their homes for sale until after Labor Day since many New Yorkers leave the city for summer homes and summer vacations.
So, inventory certainly DID roar back. But did buyers bite?
Well, it seems like they took some healthy nibbles, at least.
In Manhattan, contracts signed increased by more than 94% between June 22nd and July 22nd versus May 22nd through June 21st. But contracts signed were still down a whopping 46% versus the same time period in 2019.
In Brooklyn, contracts signed also saw a healthy month over month rebound – a 77% increase between June 22nd and July 22nd versus May 22nd through June 21st. But contracts signed were down 36% year over year versus the same time period.
So while it’s clear that buyers are getting back into the market, it’s also clear that the market is still quite a ways off from where it was last year this time.
Now that we know what happened in the immediate weeks after in person showings resumed, let’s take a quick look back at Q2 2020. You can view the full Manhattan report here and the full Brooklyn report here.
Remember, as far as closed sales are concerned, they don’t really tell us THAT much about where the market is headed because sales that closed in July went into contract back in March, April and May. So, again, this is more of an insight into what buyers were willing to do during the shutdown.
As I’ve stated before, what’s next will largely hinge on decisions made about remote work by companies throughout the city and whether or not schools will resume for in person instruction in some kind of form. More companies are rolling out their policies as we speak, and Governor Cuomo recently announced that in person instruction is permitted to resume, if school districts choose to do so. So I think we can expect to see quite a bit of movement in real estate during the second half of Q3 2020. What kind of movement, to where and at what prices? That’s anyone’s guess.
But I think we’re likely to see some of the following trends emerge, as people get more clarity on their needs:
- People may be more willing to live further from transit if they don’t need to commute as often, especially if it’s going to give them more space (particularly outdoor space). We’re already seeing this happen with some people choosing to relocate to the suburbs. But we might also see increased interest in parts of Brooklyn, Queens, the Bronx and Staten Island that offer a larger inventory of houses and/or more space per square foot.
- Some people may actually opt to move closer to work in order to cut down on the need to use mass transit to get to the office. I think this is especially likely to happen for those who will be expected to be in the office several days per week.
- While larger apartments seemed to have borne the brunt of the downturn thus far, I could see a scenario where two and three bedroom units eventually become more popular for those seeking a completely separate home office option (i.e. a room where you can close the door). This is more likely to be true if we see prices for these property sizes continue to decrease – sustained price drops may prompt more buyers to seek deals to trade up.
- That being said, studios and 1 bedrooms might still be appealing for those who live outside of the city but would like a “crash pad’ for those days when they need to be in the city for work.
What could be the end result of all these trends?
It’s difficult to say at this point, as there’s still far too much uncertainty. But, I could see a situation where people will actually “spread out” more and display more interest in a wider variety of areas, given the very different needs so many of us will have. Is that a “good” thing or “bad” thing? It all remains to be seen…
If you have any other questions about the market or you want to get some stats on a particular area, feel free to reach out to me!