A year ago, New York seemed like a much different place. Construction and development occur everywhere, with a the sidewalks are shedding it seems every block shows work in progress. There are new cranes and buildings being built, restaurants thriving, and Broadway is crammed with award-winning shows.
Then, the coronavirus hit town hard in March, and all that changed.
Over the past year, the city has been eerily quiet, and most of what’s known has gone dark.
While some residents have fled to places like Florida, others have weathered the storm, but regardless, the city’s real estate market has suffered immensely.
Some are hoping that with the coronavirus vaccine now being released, 2021 will be a year of recovery in many ways, but what will the New York real estate landscape look like?
City Struggle
The real estate market will only be capable to recover when the city truly begins to recover. It’s going to be tough. The city’s unemployment rate is over 12%, nearly double the national average. Many companies don’t expect staff to return to their offices, and some 300,000 people have left the city since the pandemic started, depleting the tax base.
New York leaders have talked about raising taxes and reducing some services, but so far, there aren’t any concrete plans to make up for the budget shortfall.
It’s a problem that, even with a vaccine, must be addressed before the real estate market really begins to recover.
Most analysts expect recovery to be a rockier and possibly longer road for New York City than for most of the rest of the country.
Rental Market
The rental market has suffered a bit. Many industries that support the city’s residents, including tourism and hospitality, were fully shut down. In October, the average asking rent in Manhattan all the way down to $2,880, which is the lowest level since 2010.
Until jobs, including in the hardest-hit sectors, return, it is going to be difficult for landlords to see a rise in demand for rent.
Rental inventory also hit a record high, with a citywide 123% increase in October.
Until there are more tenants returning to the city than there are supplies in the market, again, this will remain a problem.
A Tale of Two Cities
As is nearly all the time the case, the pandemic has continued to cement New York as the true story of two cities. Out-of-towners and low-wage workers are the most affected by the coronavirus and its ripple effects. You can see the economic crash all over the neighborhood.
However, higher-earning workers are retaining if not doing better than before as 2020 was a big year for tech stocks.
Home sales that cost over $4 million in fact top sales in 2019.
A number of wealthier New Yorkers and transplants are betting on New York’s long-term recovery and they’re using the dips as opportunities to buy. However, there’s even uncertainty in this market segment because of a proposed pied-a-terre tax that may be in the works.
Will Brooklyn Be The Place?
An estimated 22% of New Yorkers said they would have left last year, but they plan to return. Several real estate experts and analysts hope Brooklyn sees most of these returning residents.
Before the pandemic, the Brooklyn market was hot, and now there are lower rents and the area is experiencing an all-time high of inventories. Plus, the features that Brooklyn can offer tenants and even buyers that other parts of the city cannot offer, could be critical in a post-pandemic world.
For example, in Brooklyn, tenants and buyers may get in-unit laundering, open spaces, and easier access to public green spaces.
Many people changed their way of life because of COVID. They want extra space, as they work at home and homeschool their kids. When you do not have theatres, museums, and restaurants, having extra space inside and out becomes important, and that may be a trend that continues to be relevant in the New York market.
All in all, even although it is going to be a rough road, New York and its people are tough. Rather than seeing the market as down, some people prefer to see the city as offering some current opportunities, at least for buyers.
