NYC Real Estate Prices Plunge. Is It A Good Time To Buy?

The coronavirus shut the city down, affecting the number of residential property sales in Manhattan by dropping nearly 54%. (Source: NYTimes).
It’s now an excellent time to purchase a property in New York City.

Further reading: NYC Sales Data from Property Shark

The market has been softening for the past year before the pandemic hit and now the inventory has grown due to the shutdown.

There are many opportunities for buyers now that may have not existed before. Interest rates are still low, and the New York market has historically always rebounded from its downturns. 

Another factor, apartment showings in New York City were banned for the second quarter of 2020.  We are now in COVID-19 phase 3 in NYC and a real estate showing is allowed with participants wearing face masks. Some buildings require that buyers sign a form declaring they do not have COVID-19.

Many families who were shopping for apartments before the shutdown left the city to escape the pandemic and work remotely and some may choose not to return. Schools are shut down and virtual classrooms may continue to the next semester with social distancing is still in place.

Now in the third quarter for 2020  sales are down especially in large buildings.  The pandemic shifted buyer preferences. They prefer smaller buildings with no crowded elevators, shared laundry rooms, and large lobbies. Preferring buildings that offer outdoor spaces such as rooftops and balconies and located in less populated neighborhoods. 

Another important point: The concern for personal safety as evidenced by the recent spike in criminal activities and daily reports of increased gun violence across the city.  Families that are able to temporarily move are doing so or are considering moving out of the city permanently.

Those unemployed or underemployed will be forced due to economic circumstances to move out of the city or to find more affordable housing solutions.  Many young renters who lost their jobs or are working virtual and uncertain about the future of their jobs are moving back to their parent’s homes. People who own their own country homes may choose to stay there all year round as working virtually becomes the new normal. 

Many people in their late 50’s and 60’s who planned to retire in the future are choosing to retire now.

Older Americans will be forced to retire early from their job eliminating their higher risk to COVID-19;  for example salespeople at department stores and many other service jobs that can’t be done remotely.

Further Reading: Pandemic Problem for Older Workers: Will They Have to Retire Sooner? Source: NYTimes. 

These factors result in many new listings and a higher inventory of properties that we are starting already to see.

Rental prices are going down and landlords are now giving concessions. 

Inventories of rental properties are up sharply down from 2019  levels that we have not seen in years.  

There is some positive news about the low mortgage rates.

The low mortgage interest rates can increase purchasing power for many individuals, making properties more affordable.

Interest rates now at 3-4 % as of June 2020 and may even go lower.  CNBC Mortgage rates set a new record low, fall below 3%. As interest rates drop real estate buyers will return to the market. 

Low-interest rates will help businesses & corporations succeed in a lower interest rate environment. Another important point,  the prediction for a safe vaccine by 2021 and medication will spike up confidence in real estate.  This could help bring back NYC to return to normal…..The coronavirus vaccine frontrunners (check for updated)

Image by LEEROY Agency from Pixabay

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Zahavit Paz
Residential and Commercial Real Estate Broker
646.330.0180
info@pazorealty.com