A year ago, there was so much uncertainty surrounding the pandemic and politics, which made real estate somewhat of a gamble, at least in hard-hit New York City. A year later, though, and a quarter of New Yorkers are vaccinated, and we’re starting to see “normal” life resurface.
Why now is the time to buy?
We first see an increase in appointment requests, an increase in offers, and then an increase in contract activity. Then comes an increase in multiple bid situations and bidding wars, then discounts start decreasing and lastly prices start increasing. Currently, we are in the discounts start decreasing phase, and activity is compounding and snowballing. There were more contracts signed in February 2021 than in any of the previous Februarys, and a 31-percent increase compared to February 2020. But the piece that makes this appealing to buyers is that while contract activity has exceeded pre-COVID levels, prices still have not.
John Walkup, co-founder of UrbanDigs, also advises putting the current market into perspective. “We experienced two down cycles since the peak in 2015, both equaling about the same total discount from beginning to end of the cycle — that was about 10-15 percent. Since the pandemic-induced lows last summer, liquidity (bids and deal volume) returned in a big way, and we are at the peak of this activity right now. To Walkup’s point of putting things in perspective, most experts will remind New Yorkers of what happened after 9/11 and 2008. “The real estate values in New York City dropped, but only for a short period of time,”
Summer is not typically the busiest season for purchasing, but so much pent-up demand likely means this year will be different. Most experts with whom we spoke suggest getting in before the anticipated summer rush. “We are in the midst of the Spring market, and there is not a ton of good inventory. Sellers are negotiating still, but we are seeing bidding wars again.
Jared Della Valle, CEO and founder of Alloy Development, says, “As the current demand starts to outpace the supply and with the slow down in development during the pandemic, we could see supply shortages in some markets driving to increases in pricing.”
What’s going on with the luxury market?
During the summer of 2020, most transactions were in the sub-$2 million market, a trend that can be attributed to the fact that many high-end buyers were those who had the means to leave the city at the height of the pandemic. But now the higher-end market is starting to catch up. Jared Antin tells us that 66 percent more $5 to 10 million contracts were signed in February compared to January and 33 percent more compared to February 2020.
What about everyone who left?
It’s also important to note that this wasn’t a phenomenon entirely unique to New York. “Cities all over the world exhibited mass migrations to the countryside, to less densely populated areas… New York is, and will likely always remain, one of five epicenters worldwide for culture, commerce, and professional and human diversity. This is not going to change,” states Joshua Schuster, managing principal of Silverback Development.
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