If you’re ready to begin looking at homes for sale in Manhattan or if you’re wondering if now is the right time to list your New York City property, you’re likely a little leery about how the market is recovering from the pandemic.
While experts agree Manhattan real estate suffered due to COVID-19, there is plenty of light at the end of the tunnel. Here are the primary areas where the industry was impacted in 2020 and what both buyers and sellers can expect in the new year.
How COVID-19 Impacted Manhattan Real Estate
The real estate market took a bit of a hit in critical areas due to the pandemic, while others remained stable or even experienced growth. Here were the most evident results:
- Rents plummeted. Manhattan saw the lowest median rents since 2010 due to renters flocking to less expensive suburbs and record-high vacancy rates.
- Suburban markets got red hot. Suburbs like Brooklyn, Queens, and Long Island experienced hot markets as Manhattan workers relocated and took advantage of lower home prices with more space.
- Homes for sale in Manhattan began selling for below asking price. Again, because a large number of Manhattan residents realized they no longer had to commute and could live in the suburbs, demand for Manhattan real estate dropped but did not collapse as many feared.
- Consumer confidence took a hit. Uncertainty has been the name of the game since the pandemic started. This has led to many being unwilling to work with a Manhattan realtor to put their properties on the market and reducing their overall spending.
- Suburb home prices spiked and then plateaued—the suburbs surrounding Manhattan experienced record growth during the spring and summer of 2020. Westchester County saw the most significant increase in home sale prices in 28 years. However, this trend began to level off as 2020 came to a close, and many homeowners started to make plans for returning to the office sometime in the new year.
What to Expect in 2021
Thanks to the ongoing vaccine rollout and a slow return to “normal life” for many New Yorkers, 2021 will likely look quite a bit different than 2020. If you’re ready to work with a Manhattan realtor to buy or sell New York property, here’s what you can expect.
- The government’s stimulus efforts to help consumers deal with the pandemic have led to a massive devaluation of the U.S. dollar. This makes investment in the U.S. market a foreign exchange trade and makes our market more appealing to foreign investors. Foreign investment will help the Manhattan market recover, and demand for properties for sale in Manhattan will increase. Experts predict that Dallas, Austin, Miami, and—to an even greater degree—Manhattan will benefit most from this trend.
- Other major markets such as London and Hong Kong have been massively affected by the pandemic as well as by Brexit and China’s takeover of Hong Kong. This makes these markets less appealing to investors and leaves New York as the last stable megacity in the world. Again, this will drive more investors to Manhattan real estate and help stabilize the market.
- Taxes will continue to rise in Manhattan, and there will be a continued shift toward pro-tenant laws. However, the foreign investor trend will still drive buyers to the New York market in droves, and it will recover faster than expected.
- With the stock market already sky-high, many investors are looking for other opportunities that provide good entry points to the market. New York City real estate is considered down at the moment, so it provides an attractive option for investors and will create more interest in homes for sale in Manhattan.
- Fear of inflation will most likely drive more buyers to hedge the risk of inflation with real estate. Manhattan’s real estate market will be a safe haven from potential inflation.
- More and more companies have begun requiring employees to come back to the office either part or full time, so the rental market is already recovering. The continued vaccine rollout will cause even more investors to work with a Manhattan realtor and look at buying or renting out their properties.
- Mortgage rates, which reached record lows in 2020, are still hovering around the 3 percent mark. Though these low rates cannot last forever, most experts predict they will not make any large jumps at the beginning of 2021. These low rates will prompt more buyers to look at properties for sale in Manhattan to save money on their monthly mortgage or to afford more properties.
- Any Manhattan realtor will tell you that spring is the ideal time to list a home for sale. However, the pandemic has changed the traditional calendar when it comes to real estate. Those who usually travel during the winter months have stayed home, and many of those looking at properties for sale in Manhattan are doing so virtually. These factors have led to an earlier listing and buying season. If you’re considering adding your house to other homes for sale in Manhattan, now is likely the best time to do so.
- With unemployment rates at nearly double what the rest of the country is experiencing, New York still has a long way to go in terms of pandemic recovery. Most experts agree that the housing market will not fully recover until the city’s businesses and the rest of its economy recovers.
While the pandemic did cause a decline in the New York City real estate market, it also wiped out the city’s two largest investment competitors: London and Hong Kong. This, plus the dollar’s devaluation and the continued recovery of the economy, adds up to a bright future for Manhattan real estate in 2021. If you’re ready to buy an investment property, move to a new home in New York City, or list your condo for sale, now is an excellent time to do so. Work with an experienced Manhattan realtor like Kobi Lahav to learn more about the current real estate climate and get support through the buying or selling process.