From My Desk to Yours December 2020: New Beginnings
We’re two weeks away from the start of a new year, and despite an accelerating pandemic and the closing of indoor restaurant dining, here are ten reasons to be optimistic about the New York real estate market of 2021.
1. The extraordinary rollout of Pfizer’s Covid vaccine has begun amid shipment, storage and distribution challenges. Moderna and other prototypes will follow. In the next six months, most of the U.S. population will have an opportunity to be inoculated.
2. In all likelihood, the low mortgage interest rate environment will continue throughout much of next year with rates at historic levels, increasing buying power. Last week a 30 year fixed product was 2.71%.
3. The Builder Confidence Index in November was 90, up 5 from October and the highest in the indicator history of newly built single family homes.
4. A new President will be inaugurated on January 20, 2021, and we’ll have a Democrat in the White House. As immigration policies become less restrictive and travel bans loosen, the incoming administration will be more welcoming to foreigners especially international talent and students. There’s every good reason for foreign buyers to return to our market, especially to scoop up trophy apartments at a discount... like 58A at One 57 on Billionaires’ Row that went to contract last week, whose sellers paid $34M to the sponsor in October 2014, listed pre-Covid at $24.8M, then reduced to $22.5M. When it closes, we’ll find out how much more was negotiated for this corner, nearly 4,500 sf, 3BR condo with helicopter views of Central Park.
5. Manhattan housing inventory is finally stabilizing after rising week after week since lockdown lifted June 22. The best indicator of the market, the number of signed contracts has been rising steadily in every price category. In the first two weeks of December, 44 contracts were signed for properties over $4M--11 more than last year-- with the number of condo sales far surpassing co-ops by 32:7.
6. In November, the rental market experienced its highest inventory level, its greatest number of applications and the lowest prices in 12 years, with both new renters coming into New York at affordable prices and repeat tenants searching for better deals and more landlord concessions.
7. Soaring equity markets are making NASDAQ stockholders feel flush, and mood as much as money drives transactions.
8. Lower prices are attracting more first time buyers, and renters are transitioning to homeowners; proximity to the office or transportation has become less relevant.
9. The pandemic has increased second home buying, whether it’s a house in the Hamptons or a pied-à-terre in NY. The suburbs, sleepy in recent years, not only rebounded, they exploded this year. The exodus of Manhattanites from the island was not so much to flee congestion but to savor green spaces and the outdoors as alternatives to travel.
10. Not only have technological advances brought innovations to air ventilation and purification technologies for home, office and restaurants, but audio-video has streamlined the buying process with virtual showings, Zoom interviews, electronic handling of applications and board packages, and remote closings and notary services.
In New York City, the housing recovery is taking longer than in the rest of the country. Elsewhere in the nation, there’s tight inventory and rising home prices. In New York, we may well be approaching the pricing floor of the real estate market. As sellers embrace more realistic pricing, they are negotiating. We’ll be busy in 2021 making up for lost time. A peak season will start in the first quarter, and 2021 promises to be a year of renewal. With the worst behind us hopefully, we’re building a positive narrative. Broadway could return by fall 2021 along with tourism. The unfolding scenario of rising covid cases and related deaths and the continuing struggles of small businesses are disturbing to be sure. We’re not there yet, but healing and stability are on the way.