Like so much else in the world, the coronavirus pandemic has upended the New York City sales market. It is stalling deals in progress, discouraging sellers from listing during the traditional spring selling season, and changing many aspects of the way real estate is done in the city, perhaps in some ways for good.
Drastic changes mean New York City real estate sellers have two options: Retreat for now or adapt to the new normal and forge ahead. Here’s how those two strategies are playing out—along with advice for sellers who are sticking with the market, compiled from Brick Underground’s recent reporting on the pandemic’s impact on NYC real estate.
Editor's note: Click here for more of Brick Underground's coronavirus coverage.
Holding back listings
For the most part, first quarter sales market reports paint a picture of how the NYC real estate market looked just prior to the pandemic. The market was “showing fairly upbeat conditions,” says Jonathan Miller, president and CEO of appraisal firm Miller Samuel. There were increases in the number of sales and higher prices for many segments of the market.
Then it all changed: “It’s the last two weeks [of March] that put us in a different market,” Miller says.
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That’s when many sellers made up their minds not to put their apartments and houses on the market for spring. And those numbers are also reflected in the market reports: Inventory dropped when it should have been going up, for example, Manhattan listings fell quarter over quarter for the first time since 2007. It was a similar story in Brooklyn and Queens.
For broader picture of the first quarter, check out, “Manhattan's spring sales season is on pause, too” and “Listings in Brooklyn and Queens fell sharply in March as sellers hold back.”
Sticking with pre-pandemic pricing
Inventory levels seem to be the best way to get a sense of sellers’ confidence. Contract activity is less reliable because of the lag time inherent in getting contracts signed—however it is clear the number of signed contracts is down as well.
Surprisingly, a few reports show that many sellers who are sticking with the market are not lowering their prices but keeping them at pre-pandemic levels. The thinking is, explains Noah Rosenblatt, founder and CEO of UrbanDigs, a Manhattan real estate analytics site, “[I]n a market without active buyers touring homes, giving feedback, and making offers, a price cut is simply negotiating against oneself.”
No more stigma from stale listings
One reason some NYC sellers may be sticking it out is because of a decision by StreetEasy and Real Estate Board of New York partners. These listings sites “froze” their days on market counters, eliminating the stigma for properties that are lingering.
Adopting video tours
In a business that relies on face-to-face availability, doing things virtually was somewhat gimmicky. That’s all changed now that all non-essential business is closed. Now the only way to tour an apartment is online (or in the rare instance the owners allow potential buyers in as their guests.)
There a huge range in quality and some videos don’t show details that are important to buyers, like the view. For more on what apartment hunters are looking for, check out, “How to virtually tour an apartment when you can't visit it.”
Virtual closings and co-op board interviews
The pandemic is forcing NYC real estate, which relies heavily on printed-out board packages and in-person meetings—to get with the times.
While not widespread yet, brokers say a few virtual closings are happening—aided in part by Governor’s Andrew Cuomo’s executive order allowing electronic notarizations. And some deals are “closing by parking lot,” with the parties in separate cars, or are being done by escrow.
And some boards are no longer accepting paper applications and switching to pdfs or cloud-based platforms. (Hurrah for the trees!) Learn more in “Will virtual closings and co-op board video interviews become NYC's new norm?” and “Have a NYC apartment under contract but the deal is stalled by the coronavirus? Here's what you can try.”
Take the cash
Cash deals are historically attractive because they eliminate some of the hurdles buyers need to jump through, which in turn means the likelihood of a successful deal for the seller. That’s more true now than ever before.
Not only does a cash deal take away the need for financing and the requisite appraisal, it provides important security at time when there’s a nightmare looming over the mortgage industry. Lenders are having trouble reselling the loans they make and some are hitting the pause button—meaning a seller could go to the (virtual) closing table, only to find out the buyer wasn’t getting the financing they need.
For that reason, Mark Chin, who heads brokerage Keller Williams New York City, recommends that if a seller is weighing a cash offer against one that would require financing, he or she should take the cash one “even if there’s a haircut" because of a low offer. “It takes so much risk off,” he says.
For more details, read “For sellers and buyers, cash is king now more than ever.”
Check your tone
Another consideration for sellers: How does your listing read? Does it sound like it was written before the pandemic? Having some kind of acknowledgment that indicates life in NYC is not business as usual is key to avoiding sounding tone-deaf.
Brian Lewis, a broker at Compass, also suggests sellers and brokers review their web copy and “see if the tone sounds weird.” He's adding a few lines above all of his listings that address showings video tours and strikes a compassionate tone.
You can read more about it in “Reality check: How to make your NYC real estate listing not sound insensitive.”
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