An Overview of NYC’s Real Estate Market Amid COVID-19
American real estate has experienced a major hit due to the economic downturn caused by the COVID-19 pandemic. In New York City, 2020’s second quarter saw a 2.31 billion USD plunge in terms of real estate transactions. Mid-year reports from the Bronx, Brooklyn, Manhattan, and Queens show a total dollar volume almost 70% lower than the first quarter of this year. This is one of the lowest transaction activity in the past decade.
In June, although the median sales price in NYC was as high as 718,000 USD, residential sales were 25% lower than last year. Moreover, the total real estate transactions saw a 62% decline in comparison to the same time in 2019. The median price per square foot also saw a 26% decline in terms of year-over-year change. While the median price of houses increased by 7%, coops saw a 0% increase and prices of condos reduced by 20%.
Nonetheless, New York City’s housing markets are rebounding at record rates. In June, the median sale price was one of the highest price year-to-date and pricing trends have remained positive across the four boroughs of NYC. The real estate market is showing signs of a promising turnaround following several months of declining sales and low supplies.
Signs of improvement can now be seen. Lenders are searching for income generating properties again and are back in the market. With schools and offices reopening by the end of this year, an increase in residential and commercial property sales can also be expected. Experts believe that the third quarter is also likely to see a lower transaction volume yet will simultaneously undergo recovery.
Due to fears regarding the pandemic, New Yorkers are fleeing to suburbs to avoid crowded apartment buildings and living in a healthier environment. Along with residential properties, commercial real estate in suburban areas is in high demand as businesses look to expand their space to accommodate employees while complying with social distancing guidelines.
However, the suburban real estate market has not been able to cater to this high demand due to a lack of inventory. As a result, commercial and residential property buyers are willing to bid over the asking price which has led to a surge in competition.
In general, for the remaining months of the year it is expected that prices will either remain the same or decrease as the supply increases over time. The demand for properties is expected to reduce and listings will remain in the market for a longer period, resulting in buyers having greater negotiating power. By next year, prices are expected to begin increasing again and a positive trend will be seen by the third quarter of 2021. Once the pandemic recedes, the real estate market in New York City will bounce back and will experience a recovery similar to what it saw following the crisis in 2008.