The biggest drop in 30 years: what happens to the New York real estate market

Manhattan apartment sales fell 54%, the largest percentage decline in 30 years. The real estate market will have to make a lot of effort to recover from the crisis, experts say. This publication writes CNBC.

Sales of apartments in Manhattan in the second quarter of 2020 showed the largest decline (54%) over the past 30 years. This is stated in the report of Miller Samuel and Douglas Elliman (Miller Samuel and Douglas Elliman).

The median selling price fell 18% to $ 1 million, the largest decline in a decade. Only 1147 apartments were sold during the quarter, which is the lowest figure in history.

Such an impact was exerted by the economic crisis caused by the COVID-19 pandemic, and the fact that many residents left the city in this regard. The magnitude of the fall suggests that the real estate market will have to make a lot of effort to recover from the crisis.

Brokers were banned from showing apartments from March to June 22, so buyers were only able to start shopping again last week. "Manhattan was effectively closed in the second quarter until the last week," the report said.

On the subject: Study: More New Yorkers Want to Relocate

Although it may take some time to close the deals, the number of signed sales contracts also dropped in June. The number of new co-op lease contracts fell 78% in June when compared to last year. The number of new contracts for condominiums - by 74%. Cooperatives in the $ 2- $ 4 million range were hit hardest in June, with a decline of 86%.

The situation began to improve last week when the ban on private display of apartments was lifted and buyers began to look for apartments. “Agents are working non-stop now,” said Bess Freedman, CEO of Brown Harris Stevens.

But, nevertheless, many potential buyers, especially wealthy ones, left the city for the summer to relax in Hampton, New England or the West. Perhaps they will not return to the market until the fall or even longer. Some of these may delay the return, given the health problems and the long-term impact of the COVID-19 pandemic on New York's facilities and infrastructure.

It remains to be seen whether the discount deals that customers are expecting will be implemented. Analysts say that with so few transactions, true pricing remains a big deal. So far, sellers are rejecting offers from buyers who are ready to purchase housing at a discount of 10% or more, according to a study by broker Fritz Frigan from Halstead.

On the subject: The abundance of luxury apartments in the United States affects the price: what to prepare for

Friedman noted that sellers cannot offer buyers the same prices as they were before the pandemic began. “Everyone should be reasonable and fair in relation to the new environment,” he said.

Brokers say the most immediate pressure will be on the rental market as it is easier for tenants to leave town today and fewer tenants are moving. “Incredible rental offers are expected,” Friedman said. In particular, it is planned to hold a lot of negotiations and offer incentives for landlords, he concluded.

Recall that, as of mid-June, the number of free residential space for rent in Manhattan has reached the highest level in the last 14 years. A similar situation is also observed in Brooklyn and Queens. About why in New York there are few who want to rent housing, you can find out in this publication.