By Ian Slater | June 17th, 2020
I have taken a break from blogging over the past week and half as we have been focused on the immense and important social movement surrounding the BLM movement and the George Floyd protests. I appreciate all of your donations in our donation match :).
But, as of this morning on the infamous daily press conference, New York’s mayor and governor announced that we are on track to open for phase 2 on Monday. This means that the coronavirus is not over, but that it seems NY (and amazingly, NYC) have gotten enough hold of it and are prepared enough to move from the very nominal phase 1 opening (construction, manufacturing) to the much larger phase 2 opening. Phase 2 involves real estate.
What I want to address in my blog today is what we can expect on Monday but also some interesting things I’ve been seeing on the ground even during Phase 1.
One, I expect there to be an unprecedented amount of new properties to hit the market between now and Monday, now that this is “official.” Think the entire spring market plus the summer market, plus investors letting go of properties they have felt annoyed managing recently, plus people letting go of pied-a-terres, plus certain families choosing to take a break from the city. No, not the entire amount of NY real estate. But a really healthy and large amount of supply.
, I actually expect there to be a surprising amount of demand. If you look to national data, mortgage applications are at an 11-year high right now
. Rates have recently hit record lows on certain days and consumer confidence is slowly growing, as well as pent up demand. Remember early blogs about what was going on in China with sales velocity? We might see it happen here.
Three, entitled purchasers not getting what they want. There will be a lot, I repeat, a LOT of people in the market looking for deals. Low offers will abound. But sellers will have options-- distress will be few and far between, and prices have already come significantly down. A lot of buyers may get a deal and then get outbid, or may find themselves in bidding wars that they never thought could happen. They may repeatedly lose properties because they feel entitled to a “deal.” We are witnessing this happening already even when we can only show over FaceTime on the ground on certain listings.
Four, a weirdness in the rental market. A lot of tenants renegotiated their leases during this time and elected not to move, or younger workers might not have to go back to the office until 2021 and therefore gave up their apartments. Vacancy rates have already hit record highs. I expect this to continue for a little bit but dropping prices may cause a lot of better rental deals.
Five, and my favorite, a jealousy of NYC. NYC is about to enter into its “best” phase yet. Couple that with the fact that the weather is LITERALLY PERFECT, the sun is out until 9PM, the summer energy on the streets is palpable, and all of those who decamped to the suburbs may very well see the city on social media and normal media and realize why they were here and loved it in the first place. This affects real estate markets.
I’m excited to see, and so excited to show in person, and I’ll keep you updated on what happens in the markets, my blog readers!