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New York real estate market

COVID-19 Deals a Blow To the New York Real Estate Market

Post pandemic positives in the NYC real estate market offer hope for a city that lost its momentum because of COVID 19, something no one could have predicted. NYC continues to suffer from the effects of the virus. Even so, home sales and the real estate market continued to press on at the end of 2020.

The housing market continues to shift since reopening in the summer of 2020 as rental prices drop and potential buyers search in different boroughs.  If you watch the news, some experts believe the market is tanking–others believe the population is sprawling. In fact, for the third quarter of 2020, the National Association of Realtors stated home prices increased from the previous year. However, a contrast exists between struggling renters and luxury home buyers.

How Did the Housing Market Change?

Home rental prices dropped during 2020 to levels that realtors had not seen since 2010. However, rents did not fall equally across the city. High-priced neighborhoods such as SoHo saw rents drop by over 6%. However, rents in ethnic neighborhoods like Kingsbridge declined by around 1%.

Data from Realtor.com show that Manhattan apartments are renting for about 10% less than last year. Manhattan sale prices are over 24% lower than they were last year, and total home sales are 37% lower. As a result, Manhattan looks like a prohibitively expensive option for New Yorkers. Housing inventory is rising across all five boroughs, with sales listings sitting over 50% higher than last year.

Housing market predictions indicate that buyer demand is shifting from investing in expensive Manhattan locations. Buyers now require more space. Home sales spread out to Brooklyn and Queens. Real estate experts note their clients do remote work, travel to Manhattan only as needed, and feel safer outside Manhattan.

These buyers are also giving the housing market in the suburbs a boost. Communities like Westchester, sections of Long Island, and Greenwich, Connecticut, find New Yorkers fleeing the city for better home value. Those who do not prefer the suburbs now understand the inherent value of living outside the city.

These communities have increased sales for condos and single-family homes because older residents sell their existing homes for a high price to build wealth. Market data shows New Yorkers are expanding their preferred boundaries and do not see overspending as a wise investment. Many buyers view New York as a stable investment, but the prices are still too high.

Meanwhile, people in NYC are selling for steep discounts. The housing market is sitting on massive groups of luxury apartments, condos, and townhomes. Executives, such as Pamela Liebman of Corcoran Group, note that discounts are common, with an average of about 13%. Numbers from City Realty show 4000 fewer apartment sales in 2020 than in 2019.

The Real Estate Market and Mortgage Rates

Brokers around the city enjoy the idea of low mortgage rates, intense supply and demand, and vaccines to combat the coronavirus pandemic. Federal Reserve Chairman Jerome Powell believes the economy requires a low-interest rate. This approach helps provide low-interest rates for home buyers, lifting real estate markets across the county. Because NYC is one of the most expensive places to live, houses for sale might sell faster with a lower overall mortgage interest rate from lenders like Freddie Mac.

According to the Washington Post rates in February 2021 sit at 2.73% for a 30-year fixed-rate mortgage. 15-year options are even lower, allowing for a faster payoff.

Low-interest rates will likely remain until the economy begins to recover. That allows lower-priced buyers to ensure the market. Homes for sales across Manhattan are made more expensive by the so-called “mansion tax,” which levies a tax on homes over $1 million. A home price closer to $1 million is better for the buyer regardless of how much money they have. Data from UrbanDigs shows homes for sale over $2 million sit much longer than their cheaper brethren.

Now housing starts to include new or step-up buyers who are spending, as expected, $2 million or less.  Manhattan sales are climbing, but Manhattan is offering steady discounts, generally around $250,000.

A housing market forecast might claim that Manhattan is crashing and Brooklyn, Queens, the Bronx, and Staten Island are booming. That is not the case. Low home prices in Manhattan lead to quick sales, and comparable home prices in Brooklyn provide more house for the money.

Other Real Estate Trends in NYC

Home buying continues to surge across the city, and rental prices are just as low. Median rents in housing markets determine how much the majority pays. The median in Manhattan is about $750 less than it was at the start of the pandemic.

Price gains could take several years, according to Nancy Wu, Chief Economist of StreetEasy. Rental tenants, however, are still in danger of a mass wave of evictions. Many cases are pending from early in the pandemic. Renters have massive debts they cannot pay once the government lifts the eviction moratorium, and mass evictions may ensue.

According to Chief Economist Wu, Brooklyn is the new standard in NYC real estate since the coronavirus pandemic. As Manhattan offers discounts, five communities are thriving. Downtown Brooklyn, Flatbush, Gowanus, and Greenwood in Brooklyn fetch higher prices. So does South Jamaica in Queens.

Around 12,000 current listings in Manhattan indicate that discounts will last through 2021. If people are willing to negotiate, home buying in 2021 will be frantic. The good news is buying a home in NYC offers more options than ever before. Luxury co-ops with waiting lists now have their doors open to people ready to pounce on low prices and interest rates.

Lincoln Towers—The Ideal NYC Location

Lincoln Towers stands where West Side Story came to life years ago. The Lincoln Square neighborhood is the home of Lincoln Center and an artful community. A crown jewel of the real estate market with access to Lincoln Center, LaGuardia High School, Hunter Science High School, and a public library, Lincoln Towers are a hideaway from the city’s hustle and bustle. You can call 212-787-1214 for more information on the co-op.