The entire Deanna Kory Team sincerely hopes that you, your family and friends are in good health and staying safe. It is now more than a month since our great City has shut down and for many of us, the sudden shift overtook every aspect of our lives. As one of the epicenters in the U.S., we New Yorkers have been especially affected. That said, New Yorkers are perhaps some of the most resilient people on earth and no doubt we will work hard to rebuild our lives in the city we are proud to call home.
Some weeks ago, New York State declared that the work of real estate agents is essential only when “legally necessary” and, as such, only virtual showings are allowed. However, as of mid-March most New York City’s residential buildings closed to non-residents, so for the most part all showings stopped. This shutdown will continue until the City reopens and buildings allow us to enter apartments and homes once again.
Many people who own or wish to buy a home are wondering where the market is now and what the future holds. There is currently limited data, but we have culled the information that may help you understand what is happening in the Manhattan real estate market and have provided answers to questions which we have been asked on a regular basis, by both buyers and sellers.
- Was the market getting stronger before the shutdown? Yes, it was improving. In the Fourth Quarter 2019, contracts signed rose for the second consecutive quarter for the first time since 2015. November and December were particularly strong with December contracts up nearly 15% from the previous year. Volume of contracts signed continued to increase in early 2020: by mid-March closings and contracts signed were up 10% versus the same period in 2019. Lower pricing, record-low mortgage rates and what was a strong economy helped unlock pent-up demand.
- Have contracts been signed since mid-March? Yes, some contracts are being signed, in total 260 since March 23rd in all of Manhattan. But sales volume is down between 74-100% depending on the price point, size and location. Note: So far, nearly all contracts that have been signed were on properties which buyers had visited prior to the shutdown. See chart below.
- Are people buying properties without visiting them? In resales, the number of contracts signed by people who did not personally visit the apartment is quite low. However, in new development sales (where many people buy based on viewing plans and images in normal times), the numbers vary from 10-20% of the sales per Corcoran Sunshine. Please note that the contracts for new development have been signed since mid-March, have primarily been below $4M.
- What is happening to prices? What about the future? So far it is hard to tell. Recent closings help determine the most current pricing. At the start of the shutdown, very few closings transpired as it took some time to figure out how to manage a virtual closing. Now that some closings are occurring, they are showing on average – a minimal decline in prices. Appraisers and experts predict a 3-5% decline in lower end sales and 5-10% decline in the higher end.
- What types of properties are going into contract now? The majority of apartments going into contract are below $2.5M.
- What about closings? As stated above, closings are in fact taking place, some with great difficulty. Condo closings tend to be easier. Issues include: buyers do not want to close if they cannot move into the apartment, co-op closings are very hard to complete because they require the managing agent at the closing and some banks are unwilling to perform a virtual closing.
- Are people renegotiating prices? So far, our research has shown that some buyers are renegotiating prices prior to closing. Those who are not renegotiating often believe that if they plan to own the apartment for at least 5-7 years, anything lost will be made up. There are others who need to sell their current home and feel that they must make up their loss by renegotiating their purchase price or are requiring more time to close.
- What do you think the future holds? While it is anyone’s guess, I am hearing both positive and negative sentiments. It is much easier to deal with absolutes rather than the uncertainty we are currently experiencing. While it may take some time, indications are that by mid-summer the City will begin to reopen and a more active buying and selling season in New York City real estate will begin.
Time and again, New Yorkers have proven themselves to be tough and that drive will bring the City back and it will thrive again. New York City has its own unique spirit which is why our home is such a special place!
If you have any additional questions, please do not hesitate to reach out to me and/or our exceptional team members. We closely monitor the market and regularly offer buyers and sellers the benefit of our long experience having worked through a myriad of cycles.
Please stay safe and keep your spirit strong!
Deanna, Ileana, Jane, Cindy, Lynn and Stacey
NYC Real Estate Current Data-Based Snapshot
Guest blog post by Noah Rosenblatt of UrbanDigs.com
Today feels very different when looking back to the NYC real estate market from 2013 to 2015 when there was a continued progressive reflation following a severe housing crash in 2008. Those three years were ‘peak times’ for sellers, where market dynamics included super low inventory, bidding wars, and ever rising price trends. Buyers across all price points had to deal with a lack of supply options, intense competition and concessions in order to beat out competition and seal deals.
Today sellers no longer have the leverage they enjoyed during the peak years. The market dynamics are working in the buyers favor while sellers scramble to adapt. The two critical questions should be: how long will buyers enjoy this combination of favorable market forces and will there be another cycle down?
The 2nd question is a bit easier to answer. Nobody can predict what the markets will do in 6, 12 or even 24 months from now. There are too many external factors that can potentially impact NYC markets.
A necessary way to evaluate the market right now is to only analyze the very recent and current real-time market data. We are now seeing signs of life in the sub-market that started it all, the higher-end price points could be the moment for buyers to act as prices in the very high-end are significantly down from their peak.
More options. More negotiability. Discounts from peak. It’s a recipe buyers should embrace, especially in prime global city markets like Manhattan.
It’s enough to get this data geek bullish given where we have come from and where we are now.
Here are some key takeaways when looking at today’s market vs the peak period in 2015.
1. More Supply Options
2. More Negotiability
3. Discount from Peak*
* We must note that sales price trends lag the market by about 6-8 months. When discussing the peak period in mid-2015, those sales will show in the data approximately 6-8 months after contract execution due to delays in closing and public record filings.
Read more in our Fall 2018 Newsletter!Read More »
Given the steep drop in the stock market, buyers as well as sellers are asking me if this is the right market to buy or sell. For now, I will address the sale side. For those considering selling, this may be one of the better times for the foreseeable future. I say so not because I am a broker and obviously I can benefit from sales, but because of many other factors that bear directly on the market, providing sellers (and buyers) the opportunity to make deals that are mutually beneficial.
To begin with, the state of the stock market does not reflect the nature of the economy. Stock market fluctuation is not a strange phenomenon; the market goes up and down, and even when it occasionally does so precipitously, it does not suggest that an economic shakeup is in the offing. The real estate market responds to many other economic indicators, especially interest rates, the level of unemployment, earnings, bonuses, and the general health of the economy, consumer confidence, along with the supply and demand of residential real estate.
Sellers who wish to sell should put their property on the market this spring for the following reasons:
First, the market has been weaker over the past few years and we are coming off a weaker fall season where there were fewer sales and therefore lower sales prices. The first and particularly the second quarter of the year are the most active times in an annual cycle because of buyers’ desire to move over the summer. This is most often the best time for sellers to attain higher prices.
The second reason is that it has already been indicated that the Federal Reserve will again increase interest rates. This often prompts buyers to buy now rather than that wait and end up paying higher mortgage interest rates.
Third, bonuses are generally higher and many first-time buyers will try to take advantage of the softer market conditions and buy now. Thus, the potential that sellers can achieve relatively higher prices because of the anticipated demand is much more promising.
Fourth, waiting for the prices to increase may not be wise because, as I indicated earlier, we are now about to begin the high season, and the market will definitely slow down once the summer comes around. As a rule, in a slower market, prices dip and sellers may not be able to achieve as strong a price.
Based on the above, I encourage sellers who need to sell, not to wait any longer. With effective marketing and skilled brokers, sellers can achieve the strongest possible prices that the market will bear.
If you need any further information or valuation of your property, please do not hesitate to call or write to 646-665-4961 or to email@example.com. I will be more than happy to answer any of your questions.
All the best–
Happy New Year! Each new year I provide an overview of the past 12 months of Manhattan’s residential real estate market, offer some thoughts based on many economic indicators, and try to gauge the tenor of the market in the first 6 months of the new year.
Interestingly though, notwithstanding the trepidation that many buyers and sellers experienced in 2017, the year ended on a positive note, prompting some speculation by agents that 2018 could be a strong market. That speculation is further bolstered by the strength of the economy and the stock market, coupled with the traditional strong “spring” real estate market in New York City (January through June). Given the recent tax reform bill though, the perceived political and economic volatility both domestically and internationally, many would-be buyers and sellers are concerned about the impact on the Manhattan residential real estate market. There are many articles explaining the potential downsides that may transpire, and yet, as explained above, there are countervailing positives.
Since the first and especially second quarters of the year are historically the most active in an annual cycle. As such, it is important for a prospective buyer or seller to be well informed before purchasing or selling a property in the wake of the passage of the tax bill while also considering how the market performed in 2017 and its implications for 2018.
A YEAR IN REVIEW
2017 was a unique year in the New York City real estate market. Last January, many New Yorkers felt uncertainty over what to expect with the new administration. This frame of mind gave serious pause to both buyers and sellers about their plans to buy or sell. Post-inauguration, however, many economic indices (most notably the stock market) improved markedly and continued to gain strength throughout the year. While many benefited from the strong economy, in Manhattan, many buyers remained wary and concerned that the record-breaking stock market would not last. This apprehension manifested in a slow and cautious market.
That said, it is worth noting that historically, the real estate and stock markets do not always move in tandem. In contrast to today, I have witnessed over the years where the inverse occurs: periods of weaker stock markets occurred concurrently with stronger real estate markets.
THE SPRING MARKET 2018
The passage of the tax bill is not likely to have an immediate impact on the residential real estate but due to the conflicting messages about the potential adverse or positive effect on the market many people still wonder what the future will hold. Many buyers are hoping that prices drop further, yet other buyers – and certainly sellers – feel that the market might even become stronger. It is true that some of the proposed changes to individual tax rates and itemized deductions will impact New York City, including the mortgage interest deduction, state and local income tax, and property tax deductions. But then many of the over $4M buyers may not be negatively impacted.
In fact, for those who have been waiting to buy, this time period might well offer an opportunity to purchase at current lowered prices. If uncertainty about the near-term implications of the tax bill is stopping a buyer from moving forward with a purchase, they should consider the longer-term implications of buying now. Those who wish to buy and plan to live in the home for over 10 years should be comfortable in the knowledge that in the long term, real estate continues to increase in value.
While some buyers and sellers will generally remain cautious, I believe that the market will continue to gain some momentum through the first half of the year. This projection, as indicated earlier, is supported by the current economic indicators – the stock market continues to rise, bonuses are likely to be higher than last year, unemployment is historically low, interest rates are still near record lows, and the overall economy remains very strong.
For a comprehensive analysis of the market and projections for 2018, click here.
All the best–
Regardless of how the tax reform bill is finalized, it appears that overall the residential real estate market in New York City may benefit as a result. While some buyers and sellers remain uncertain, in general, it seems that the market will continue to gain momentum as we approach 2018 and beyond. This projection is supported by the current economic indicators—the stock market continues to rise, bonuses are likely to be higher than last year, unemployment is down, interest rates are still near record lows, and the overall economy remains very strong.
For many sellers, buyers, and brokers, this year was a tough year to make or hold together deals because of the political uncertainty that the Trump administration has created. The constant barrage of news stories engendered some fear in the minds of many buyers, and trepidation among sellers. This created a situation of false starts and stops: buyers second-guessing themselves and sellers feeling alternately lucky that they sold their property, albeit upset because they were compelled to sell at a lower price than they expected.
Due to the lower buyer’s confidence in 2017, some serious sellers had to lower their prices. That created opportunity for buyers. In fact, it appears that some of the pent up buyer’s demand is manifesting now in the number of contract signings. As of the beginning of December, the number of contracts that were signed in Manhattan properties during November was up by nearly 5% over November 2016. While contract volume is down from 2014-15, thus far the number of contracts signed in 2017 exceeds the number sold in 2016. I attribute this to savvy buyers who understood that they had an opportunity to purchase at lower prices, as well as to realistic sellers who recognized that the market had changed.
In short, reality has begun to sink in the marketplace and buyers have become more confident. All this is notwithstanding the impending tax reform bill. I think that says a lot about the potential strength of this market! Right now, I am advising sellers who want to put their properties on the market in the New Year. As the new season begins, and it would be wise for buyers to consider purchasing early in the year in the event that prices escalate as some predict will happen during the first half of 2018. If you have any inquires about the market conditions, please don’t hesitate to write to firstname.lastname@example.org or call 646-665-4961.
All the best–
The Manhattan real estate market continues to be beneficial for buyers for the remaining weeks of this year. It is difficult for many sellers to appreciate why, with the record high stock market and strong economy, sellers are not reaping the benefits. The answer is that the stock market and real estate market do not always move in tandem. In fact, there are many cases that point to the exact opposite (as is the case now), when the stock market is strong and the real estate market is weak….and vice versa!
There are other factors that influence the real estate market conditions, many of which are unnerving to potential buyers. Global markets are gaining strength and earnings are still looking good, but many are concerned because we are in the 8th year of growth within a traditional 7-year recovery cycle. Fear and uneasiness persist as many worry that an economic “shoe” will drop, which will affect their personal finances as well as the real estate market in general. This continues to paralyze would-be buyers, especially those who do not need to buy immediately, and prevents them from making offers to purchase a new home.
If the stock market maintains its strength through year-end, there will be some potential buyers receiving higher bonuses. Those who benefit from these strong bonuses often buy a new home – especially in such a buyer’s market. There will also be savvy investors who understand that the time is now to jump in and invest in a home.
Currently, I hear buyers saying that the market will continue to drop and that they are waiting for it to go even lower. As with any market, trying to time a “bottom” can result in missing the actual bottom of the market. It is important for those buyers to appreciate the fact that a) interest rates are still low and history shows that, and b) buying in a market where there is a lot of fear and pessimism often turns out to be the best time to buy.
As for sellers, now more than ever they should be aware of market conditions and the importance of pricing properly, especially when a listing first hits the market. Historically, a listing that is priced too high at the outset often sells for a lower price than if priced realistically when first listed. At the present, sellers and brokers are having a difficult time establishing the proper price which feels like a good value and at the same time, leaves just enough room to negotiate, allowing buyers to feel they are making a good deal.
As I said in the past, it is impossible to generalize about the entire Manhattan market as each segment of the market operates somewhat differently. It is important for a seller to work with a seasoned broker who can conduct a thorough research on comparable properties that are currently selling and historical sales to establish the proper listing price based on the listing’s location, as well as the amenities and attributes that may be unique to the building.
If you have any questions regarding the market or concerns on the pricing of your property, please contact me at email@example.com or call 646-665-4961.
All the best–
As I indicated last month, the Manhattan real estate market over the summer and September was steadily chugging along and leaning towards a buyers’ market. However I had started to sense a slight shift toward sellers again. This is in large part because the economy was stable and many sellers had begun to lower their prices, becoming more realistic. It seems that this slow shift may be continuing: in these early days of October I feel a definite uptick of energy in the real estate market. Maybe it’s the energy of people finding their rhythm in their offices and classrooms now that the transitional months of summer and September have passed, but in my experience, it’s mostly due to the subsiding anxieties related to the stock market. Many market watchers have been waiting for a “shoe to drop”, for there to be an “October surprise” – but given the steadiness of the markets, others have begun thinking that the markets will remain stable for the rest of the year.
In my many years of experience, I have seen various market crashes, including the 500 point drop in 1987, when America became involved in the 1990 Kuwait Invasion, and the 2008 collapse of the Lehman Brothers. Historically these events all happened by the second week of October; and if we follow the same pattern this year and avoid a “surprise”, we will likely experience a more active and thriving market.
Critics have been saying that the stock market has been overvalued and that the federal government will be increasing interest rates any day now. There are various articles warning of real estate market bubbles worldwide, but readers should research carefully to see if the headlines that they are seeing apply to their immediate situation.
Broad statements about Manhattan real estate are rarely 100 percent reliable. It is important to understand that the New York City real estate is incredibly segmented; not just by type of real estate: condominiums, co-ops, and townhouses and their neighborhoods, but also by building quality, price range, location and a myriad of other factors. An investor reading of condo pricing trends in the Upper East Side and Midtown should recognize the same does not hold true if that investor is looking for a townhouse in Greenwich Village.
If you want to know more about the current NYC real estate market or are looking to sell or buy a property, email me at firstname.lastname@example.org or call 212-937-7011.
All the best–
Manhattan felt the cooler air of autumn come earlier than usual over Labor Day Weekend, a perfect end to a beautiful summer with comfortable temperatures and a reasonably active real estate market even in the dog days of summer. Open houses saw a steadier stream of attendants than a typical summer and co-op sales in July rose 13% higher than the previous year with 533 contracts signed.
The news cycle has continued to trend as previously mentioned and the market has been chugging along regardless of the irregularities that are still occurring in American politics. If the economy continues to strengthen as we expect, year-end bonuses on Wall Street will be higher, which would fuel the 4th quarter leading into 2018.
September is historically a time of transition, with the beginning of a new school year and the gradual uptick in activity for the real estate market. People can expect new inventory to start coming on the market in mid-to-late September into early October. My team and I have invested our time over the summer in preparing for the final months of 2017, including the mailing of our Fall Newsletter. The newsletter includes a comprehensive market analysis of the past three quarters and what to expect at the end of the year, as well as advice on the benefits of outdoor staging, the dangers of overpricing, and assessing property value in NYC.
If you’re considering selling or buying this Fall, our newsletter includes information on how to prepare and approach this season’s market; to receive a copy, email email@example.com or call 212-937-7011.
All the best–
Welcome to the Deanna Kory Market Report, a series on the real estate market news based on research and personal observation.
We look forward to updating more frequently this Fall!
The market has been showing some small, but promising signs of picking up from a quiet summer and it’s partly due to how adaptable people are in times of uncertainty. Sellers and many buyers have been nervous with their investments, tuning into news that has been churning out drama after drama in a seemingly endless loop. However, the constant stream of crises is becoming white noise for many people and now is a way of life under this president and is now expected. Even with the recent North Korea conflict, there are hopes that this will follow suit with the previous unsettling news stories and will eventually dissipate.
My favorite metaphor for a market like this is to picture a city street bustling with people and when an unexpected downpour begins, people scatter. They duck into stores, look for scaffolding, and even huddle under bus stop with coverings if there’s space! People will wait for a few minutes, while trapped under the nearest cover from the rain, hoping it will stop soon. Realizing the rain won’t stop, eventually people head back onto the streets, open their umbrellas or drape their coats over their heads to get on with their day.
Buyers and sellers have been put off by the current series of crises and uncertainty on the political scene, but I already sense people are beginning to feel more confident about the stock market, especially because earnings remain strong. Those trends, if unabated could lead to higher bonuses at the end of the year. While no one can say when the deluge of breaking new stories will subside, I see buyers and sellers opening their umbrellas and slowly but surely coming back to the market.
All the best–