By Ian Slater | May 27th, 2020
The market in New York has gone through several phases in the past few months, and we seem to have entered a new one this week and, to an extent, the end of last week.
The first phase was the complete and utter, concrete-wall style STOP of the market which occurred in late March and early April. Everyone is trying to figure out what was going on, we were in immediate, fear phase.
By mid-April, we realized the gravity of the situation and the market had not just “invisible hand” shutdowns to grapple with, but actual, policy-based stoppages (shelter-in-place, illegality of showings, etc.). It was widely apparent that the only deals that were getting “done” were those where a buyer was already in contract to purchase a property, or someone who had seen a property in person prior to shelter-in-place, or there was an extreme shark in the market taking advantage of a very low number offered to them.
Early May began a time of an extreme pivot. Brokers like myself figured out how to exist in the virtual world, with the number of virtual tours available skyrocketing, and those who had video or virtual walk-through technology available and ready really using it and getting it out to the buyer world. Buyers, once the reality of the situation set in, began to be more comfortable viewing things virtually. People began to make plans to either leave the city altogether, or decided to stay and remain in the market. Plans were concretized.
We are now at the end of May and while we still have the inability to show, the virus still remains at large, and the gravity of the situation has not changed-- the reality is that the deaths and cases have fallen precipitously and I have seen what can only really be characterized as shelter-in-place fatigue. This has brought on the current phase of the market, which I deem as the price discovery phase. If people have decided they want to stay in New York, or decided they want a place in New York, they have become comfortable with the virtual showing and now are to the phase of potentially making offers.
I have received four offers this week on properties priced from $795,000-$12,950,000, and am in active negotiations on all.
However, the offers are lower, sometimes precipitously lower, than they were prior to shelter-in-place and there is no data to prove precisely where the market “should” be. A seller is going to sell where they feel comfortable, and a buyer is going to buy where they feel comfortable, based on all of the factors that they have collected on their respective sides. And, transactions will likely begin to happen in a bit of a higher volume in the next couple of weeks as we slog through this price discovery phase.
The next phase, one can only hope, is the actual lifting of some of the hurdles, with proper safety measures enacted, and the price discovery phase will give way to the price actualization phase. More data will become available, either hard data or anecdotal data, and we will likely see that the first buyers out of the gate will have been the ones who were rewarded with the best prices, because they had the highest risk tolerance, to be actors in the phase of price discovery.