Facing the New Reality (living in times of COVID) has impacted every single industry. In many cases it has been extremely detrimental. In some cases less so. In some industries there has been difficulty but there has also been a recovery. Here we take a look at the real estate market.
According to Douglas Elliman appraiser Jonathan Miller:
“There has been an upward grind in slow motion that’s been occurring since last spring. But Manhattan has just not kept pace with the rest of the region.”
Since the pandemic began, the median price has only dropped slightly by around four percent. Indeed the average sale price hardly changed at all. The one big change was likely office rental which dropped due to lockdowns.
The good news however is that selling apartments is taking less time due to much more online viewing. With more hope coming from the new immunizations, there is much more optimism in general which of course spills over to housing. As CEO and founder of Modern Spaces Eric Benaim pointed out:
“Many developers reduced pricing during COVID, so buyers will now see an opportunity to purchase a ‘value.’ FED has said it plans on holding the current interest rates until 2023, which will also help.”
This sentiment was echoed by CEO of MNS, Andrew Barrocas who believes that it is likely the NYC market will recover around 50% of what it has lost in the next six months. He added:
“That’s contingent on 50% of people returning to the office,” Barrocas says. “If 75% return, the market will recover 75%. If it’s 25%, the market will recover 25%. We have 20,000 vacant apartments right now. It’s purely a supply and demand issue. There’s a direct correlation with the rental market and people retuning to the office and with the current trends, I feel 50% of people will be back in Summer 2021. It’s what makes New York, New York.”
One somewhat burdensome fee that New York City tenants have traditionally been subject to are real estate brokers. Given the acutely oppressive rental market, tenants have been highly dependent on this profession, sometimes having to pay up to 15 percent of the annual lease to a broker.
But as of last Wednesday, they have been eliminated. In an
addendum to last year’s New York State rent laws, regulars out-ruled the broker
fees being charged to renters. This move
has the potential to completely turn the market on its head and offer tenants
huge protection. This will eliminate the
financial leverage that brokers in New York have been holding over the rental market.
Brokers will still be able to take a fee, but these
will have to be paid by the landlord. The
only case where this will not happen will be when a prospective tenant hires
them to actually find the apartment.
So for example, those coming from outside of NYC who have
found their own rentals online will now no longer be forced to pay a broker’s
fee (since the broker has actually not done anything!).
Charles Dickens’ words from the 19th
century could apply to 21st century New York real estate. “It was the best of times, it was the worst
of times…It was the spring of hope, it was the winter of despair.” Right now residential homes are faring badly
in the real estate market, but commercially the situation looks far better.
2013 to the present, approximately 16,200 residential condominium units (within
682 newly constructed buildings) were completed in NYC. Today, only three
quarters of these have been sold. There
are approximately 4,100 apartments – many in luxurious buildings – that are still for sale. This number does not even account for the
sales over units currently under construction.
There have been some drops in prices of units in towers and these figures
could drop even further.
from past cycles could also be making a comeback: bulk sales of unsold units to
investors, condos converting to rentals en masse, and multimillion-dollar
“rent-to-own” options for sprawling apartments — a four-bedroom, yours for just
$22,500 a month. The slowdown is uneven
and some projects are faring better than others, but for well-heeled buyers
there is no shortage of discounts and sweeteners to be had.
Commercially however, the situation looks far better. There
have been quite a few impressive real estate transactions in the area. Examples of this include:
- the $7.25 million sale of 2021 Grand
Concourse in the Bronx – a 59, 292sq. ft. 11 story building in Mount Hope
- the $63,800 annual rent of 39 West 32nd
Street in Manhattan
- the $2.2m annual rent of 83 Maiden
Lane in Manhattan.
In addition, Unizo Holdings – a Japanese
real estate firm – is selling off the remaining parts of its New York real
estate portfolio via CBRE brokerage.
HomeGoods retail store located in Mount Kisco has also been sold for $6,829,350. At the time of this publication, the buyer
Historically it’s been a well-known
fact that living in New York is expensive.
Rents especially can be incredibly cumbersome. While singles have traditionally preferred
living alone the expenditure involved in this is only getting worse.
According to a recent SmartAsset report,
nationwide, New York is the “second city where a roommate saves you the
“Roommates save on average $1,056 per month each, or about $12,600 per year each. This means that together two roommates have a combined savings of more than $25,000 annually. Given the sheer number of people, finding a roommate in New York should not be difficult.”
That is a saving of close to $1,000 every.single.month.
There are five boroughs in New York and on average, rent for one bedroom in any
of those areas is $2,915 and for two bedrooms, $3,717. Which is how you get to the $25,000 yearly
savings figure from the SmartAsset report.
Having said all that there are some
less expensive options to help tighten the budget for those just starting out
in New York. Take a look at NYC Mesh – a
group of New Yorkers who are building their own Internet service. The volunteer
non-profit entity works on donations of approximately $20 per month from each
member for use of a high speed connection which can be used to stream videos
without any issues. It works with a
super node antenna and 31 hubs in lower Manhattan and some parts of
Brooklyn. Another super node was
recently installed in Sunset Park as well.
And then of course there is the
co-living space option. One example of this is Quarters which currently manages three of these
housing spaces in New York in order to “provide an easy solution for people
looking to move into big cities. With an average price tag of $1,599 per month,
this is much cheaper and a great way to network.