Hello Summer, Hello Phase 2!
Welcome to Phase 2 – The Great Reopening! I hope everybody made the best of their quarantine and remained healthy, safe and sane. Rebecca and I have been hunkering down with the kids on the Upper West Side for the past three months. During this time, we watched the incredible transition of our great metropolis from the world’s capital of culture and commerce to a beautiful post-apocalyptic dystopia where you could walk through Times Square and see nobody. We then watched and participated with our children and our amazing City in a protest movement that was long overdue. And here we are in Phase 2, with the City and its economy reopening and starting to come to life again.
I have wanted to write for some time, but I have held back largely because the world was on fire. Writing about my opinions on the NYC real estate market just didn’t seem to be that important and might strike some as tone-deaf in light of the tumult encompassing everybody’s lives. But now that NYC real estate has officially re-opened as of June 22nd, and given how crazy busy we have been in just the short time since, it seems appropriate to address my audience with what I know best: Real estate!
What has happened to NYC real estate over the past few months?
As I discussed in last quarter’s Digs newsletter, after years of a slow correction off of the 2014-2015 peak, 2020 started off looking like we were poised to enter a new healthy market, where some leverage had returned to sellers, but was still relatively evenly distributed between buyers and sellers. This all came to a screeching halt in mid-March when life as we knew it was put on hold at the beginning of the spring market, which has historically been the busiest time for the NYC residential real estate market. Over the past 3 months, barely any units were listed or entered contract relative to a typical 90-day period in NYC real estate commencing on March 15th. Pretty much the only resale deals that were entering contract were for units that already had accepted offers on them, or were seen in person prior to the pandemic.
What will the NYC market look like going forward?
That remains to be seen, but I have a few opinions on the topic. Let’s first check out some statistics.
Inventory will be high. The listings that are currently on the market will be joined by (i) units that were not listed during the spring market that otherwise would have been, (ii) units that were on the market pre-Covid but pulled off the market during the pandemic, (iii) units that were planned to come to market during the summer and fall markets and (iv) units that were not planned to be sold, but where owners decided to leave town because of Covid. While it is unclear if all of these sellers will choose to list in the current uncertain environment, a large percentage of them probably will, and I think it is fair to assume that inventory will be above-normal for at least the remainder of the year. You can already start to see this with the number of new listings that came to market in the last 2 weeks.
At the same time that inventory will rise, demand will be weaker, but I don’t think it will be as weak as many people fear. Generally speaking, there remains widespread wage and employment uncertainty for many, which will likely keep younger first-time homebuyers sidelined until they feel more secure in their careers. Also, couples and young families who were always going to be making the move to the suburbs, but were previously planning to squeeze out a few more years of City life will likely just move straight to suburbs. The much-publicized exodus to the suburbs is real, and our Westchester and Long Island businesses have seen quite a bit of activity since the onset of the pandemic, but the media has sensationalized it a bit and plenty of people remain long on NYC real estate and will return. Finally, older buyers and empty nesters, who were previously inclined to spend their golden years in NYC, but are at a higher risk of complications due to Covid-19, will unlikely want to make the move to NYC at this time.
In my opinion, this reduction in demand, however, is going to be a short-term setback, and, once there is a proven treatment and/or vaccine, the market will stabilize – but that will take time. And during this time, there will be lower prices – I’m guessing for at least the rest of this year. Since real estate has only just reopened, the post-pandemic market is still incredibly immature, and, short of anecdotal data on signed contracts provided by brokers, we won’t know the extent of the discounts available relative to the pre-pandemic market for at least a couple months.
In a general sense, I foresee discounts between 5-10% in Manhattan and less in lower-inventory markets like Brownstone Brooklyn. Prices had been correcting for many years leading up to the pandemic, and as stated earlier, it had finally seemed like the long-winded bear market had finally subsided in the early days of 2020. Because of this, I don’t foresee an absurd drop in values like we saw in the aftermath of the 2008 financial crisis, which saw years of inflated prices due to lax lending standards before that bubble burst. Pre-pandemic, there was no bubble, which is why I believe we are in for a softer landing than we saw previously.
Westchester and Long Island!
We are extremely fortunate to have launched our Westchester business last November, as we have seen tremendous growth over the past few months, with several new sales listings, over $3M in contracts signed in just the past 2 months, and a number of buyers looking to purchase homes all across the county at all price points.
In even bigger news, Digs is officially in Long Island as of March. We brought on Victor Ancelson, an engineer by training and 30+ year resident of Great Neck who knows Nassau County and its real estate better than most county historians,. We will soon be listing a terrific home in Manhasset Hills and are currently working with several buyers across the North Shore, South Shore and Hamptons.
Covid-19 Frontline Worker Meals
During the paralysis of our City when the virus was taxing our medical system to the brink of collapse, we, as ordinary humans without the skill set to be particularly useful, felt helpless. We wanted to do something to help, but had no idea what that could look like, so Rebecca decided to leverage our network and raise money to provide meals to front-line medical personnel at a number of the City’s hospitals. We ended up raising over $8,000, made 19 hospital deliveries throughout Manhattan, the Bronx and Queens, and fed over 550 people! With the remaining money, we intend to make a donation to City Harvest, Meals on Wheels or God’s Love We Deliver. If you were one of the many generous donors, please let us know if you have a charity you would like us to support.
Digs Exclusive Sales and Rental Listings:
Check out our currently available exclusive listings. Please be in touch if you’re interested, or forward them along to anyone you know who might be!
177 Union Street, #1
Also Available for Rent at $9,250/mo
15 Broad Street, #702
2br/2ba Condo w/ Private Terrace
39 White Street, #3
Upper West Side
310 West 97th Street, #34
Upper West Side
263 West End Avenue, 7A
Upper West Side
41 West 72nd Street, PHB
Upper East Side
400 East 85th Street, 18F
245 East 54th Street, 18H
525 West 238th Street, 2C