By Colin R. O'Leary
The real estate market in NYC has been disrupted like most businesses due to the affects of the ongoing Coronvirus pandemic. The springtime is typically the busiest time of the year in most real estate markets across the country. Right now, the sales market is in a pause. Brokers are questioning whether its moral or not to continue showing properties as the virus worsens. Some sellers are refusing showings completely right now. Showings have nearly ground to a halt over concerns of the Coronavirus here in NYC. No one is sure how long this will continue at the moment. So how will the NYC real estate market be affected by this over the long term? The short answer is that we don't know yet.
Real estate is a cyclical business by nature. While the market for people buying and selling real estate is 24/7/365, the springtime is usually the busiest time of the year when it comes to showings and new sales listings hitting the market. The busy springtime market usually leads to an increase in real estate closings happening around the early summertime. New listings typically slow over the summer in NYC, when homeowners are out of town visiting the beach or mountains, until September when things pick up again. The same cycle occurs every year. This year is different though.
Real estate is a very hyper-local business here in NYC. At any given time it can be a buyer market in one neighborhood and a seller market in another neighborhood within the same borough. The Bronx real estate market is separate from the Brooklyn or Manhattan real estate market. The real estate market for condos in NYC is different than the real estate market for townhouses. The residential real estate market is separate from the commercial real estate market. Each neighborhood, borough, and property type will be affected in different ways this spring by the Coronavirus pandemic. How they will be affected is TBD.
Buyer's markets could worsen in some neighborhoods, especially if potential buyers who are on the fence about buying decide to stay on the sideline this spring. There could be excellent buying opportunities in the marketplace this spring for those who are willing to come off the sidelines during these troubling times. Interest rates on mortgages are at historic lows. Inventory levels are high in many neighborhoods, especially in the condo market in places like Manhattan and Brooklyn. This combination of factors is driving prices lower in many markets.
On the other hand, seller's markets that had little inventory before the Coronavirus pandemic could see prices rise this spring (think single family and multi-family townhouses). If potential sellers hold back from listing properties this spring, it could create a supply shortage driving prices even higher in certain neighborhoods. Real estate sales are driven by supply and demand. The lack of supply might create favorable market conditions for some sellers in NYC this spring.
The uncertainty level right now is high in real estate, just as it is in most industries. One thing that is for sure is that the pause in property showings right now will surely put a damper on the number of contracts that are signed this spring. Deals that are in-contract could be at risk if borrowers are unable to secure financing from lending institutions. Will properties still be trading hands? Yes, absolutely, but at a slowed pace. Only time will tell how the Coronavirus pandemic will affect the NYC real estate market in NYC over the long term.