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When the coronavirus first came barreling down on New York City in March, we asked some of the city’s top brokers and agents how they thought the crisis would affect the real estate market. At that time, the big factor was uncertainty, but we now know more about the virus and the trajectory that New York’s reopening is on. So what will the summer, typically the height of the market, look like this year? 6sqft spoke to real estate experts across the board to get their predictions on what’s ahead, from which price points will be most affected to what amenities buyers are looking for to trends in the surrounding suburbs.
It could be a slower summer
It’s easy to look at things on the surface and assume the market will be slow this summer. But as Garrett Derderian, founder and CEO of GS Data Services, explains, it’s a bit more complicated than that. “Since the mandated ‘stay-at-home’ order was enacted, there was a steep decline in new contracts, and fewer homes listed on the market. Many homes that were previously listed have also been taken offline, as the pool of buyers has shrunk considerably.” However, he doesn’t expect a significant loss of value in long-term prices. “Prices in New York have been in a general decline for the last two and a half years and were flattening at the start of the year. This is a key differentiation from the prior downturns in 2001 and 2008 when home values were at record highs for the time. Unlike the great recession, the current black swan event is a health emergency turned economic crisis. Housing is a casualty, not the cause. Still, active buyers may be able to negotiate better deals in the current environment should a seller need to move.”
To put this into concrete numbers, Garrett reports: “Since the start of Q2 through May 18, the number of contracts signed in Manhattan is down 82% year-over-year. The median contract price is down 13% to $990,000. In Brooklyn, the number of contracts signed is down 76%, while the median price is down 9% to $869,172. The percentage decline in sales will grow as the quarter progresses and would-be buyers are unable to view homes in-person. The drop in median price is largely a reflection of the price points that are trading, not the value of individual homes. Buyers in the prime and super-prime markets often are more hesitant in times of uncertainty, resulting in fewer transactions.”
However, as Elegran states in their April market update, “the true effect of this crisis on prices will not be known for 3-6 months when the deals negotiated today begin to close and hit the public record.”
It will start getting back to business as usual
As Governor Cuomo recently said, “cabin fever” is a second epidemic. And for those New Yorkers who absolutely can’t take their apartments anymore, this summer is going to be their first chance to change it up. “A lot of people we’ve talked to are ready for change, and for something different, which is what we expected. These people have been in their homes for two-and-a-half months, they’re figuring out exactly what they do and do not like, and are ready for some new walls to be looking at,” said Andrew Barrocas, CEO of MNS.
And then there are those who were supposed to move in March, April, or May (the spring is typically the busiest time for real estate in NYC) but either couldn’t or were too nervous. This has resulted in a lot of people just waiting to pull the trigger. Eric Benaim, CEO of Modern Spaces, notes that his own firm has done a couple of thousand virtual tours during this time. “There is so much pent-up demand to buy and spend that I feel like the market will balance out… Mortgage rates are at an all-time low and a huge supply of resale listings will likely begin hitting the market as buyers who have been holding out during the pandemic decide to move forward with selling.”
Lisa K. Lippman of Brown Harris Stevens expects to see “increased negotiability and properties trading at lower prices” four to eight weeks after physical businesses begin reopening. “This will be primarily attributed to properties that were listed for some time prior to the pandemic and sellers who had been carrying two properties and can no longer afford to do so,” she explains.
Javier Lattanzio, director of sales and rentals at Time Equities, thinks things depend on schools. “In the event schools open in September, we’ll have a rush for sales and rentals throughout the city.” And since it seems the city isn’t likely to make this announcement just yet, he thinks this rush will likely come later. “Prices on the sales side during the summer will remain the same, no one is doing any adjustments at this time. If anything, end-of-Summer is when, if any, adjustments will happen.” To this point, Barbara Fox of Fox Residential doesn’t expect families with young children to take them out of school and leave the city. “I don’t think it’s going to be a huge shift out of New York,” she says. Fox adds that the hospital system in New York is still going to remain a desirable asset for people remaining close.
Things will pick up, but not at all price points
Many of the agents whom we spoke to feel that the high-end market will be slower to come back. “The ‘luxury’ market will be much slower to recover since summer is typically our slowest season and that seasonal slowness will be exacerbated by the fact that so many of those buyers left the city in March and April and have no plans to return until after Labor Day, possibly longer,” said Cathy Taub of Sotheby’s International Realty and founding co-chairperson of NYRAC.
However, agents see a lot of promise in the mid-market. “If we open for showings in late June/July, the sub-$2 million market will be active, a result of extremely low interest rates and buying opportunities. Those are mostly millennial buyers who are committed to urban living for the long term,” said Taub.
Common founder and CEO Brad Hargreaves makes the point that affordability is key. “While wealthier people may stay in the suburbs, the vast majority of those who left cities when the pandemic began will head back this summer as their cities reopen. Blue-collar and junior white-collar workers will all need places to live close to where they work, in addition to the essential workers that never left in the first place. The renter demand will be for affordable places to live, not luxury apartments with social distancing measures built in. The renters who can afford that product are likely not going to come back to urban areas at all. Many developers are saying ‘How can we build for social distancing?’ but what they really should be asking is ‘How can we build for affordability?'”
Or will luxury buyers be undeterred?
New York City real estate has long been considered one of the safest places to invest, and for those with the means to do so at a high level, they may be undeterred. Jacqueline Urgo, President at The Marketing Directors, said she doesn’t foresee this changing. “The city is alluring to both homebuyers and investors, and we expect this sentiment will continue to stand the test of time. Now is a good time to invest in new residential development, particularly in New York, which can certainly be viewed as a buyer’s market.”
Virtual tours will still matter
Jared Antin, director of sales at Elegran, believes the new norm of virtual tours will continue to be a key factor. “Once restrictions start to ease, in-person showings will likely resume, though virtual showings may be used as an initial pass, and buyers will need to be well-vetted and qualified before seeing units in-person.” For that reason, Jared thinks it’s “particularly important for buyers to get pre-approved and have an attorney retained early in the process.” And he wouldn’t be surprised if there are bidding wars for well-priced apartments. “Inventory is still low and buyer demand will likely mobilize faster than sellers supply,” he said.
Buyers’ wishlists are going to look a bit different
Perhaps the most common prediction when it comes to the apartment hunt is space for a home office. There’s already a wide-held belief that many companies will forego their office space now that they see their employees can successfully work from home. To that end, several agents also think private terraces will become more desirable as people work from home and want their own personal space to get outside. Agents think buyers will also look for practical perks like in-unit washer/dryers, entrance foyers to remove shoes, and sound-proofing (Douglas Elliman agent Eleonora Srugo notes that noise complaints have gone up 60 percent during this time with so many people at home all day).
As will their amenity wishlists
When it comes to purchasing an apartment, the value for a lot of buyers comes down to the building amenities. But with most of these spaces currently closed, someone’s wishlist could look a lot different. “We could be negatively adjusting for certain amenities that are losing popularity… such as shared areas including gyms, gardens, or grilling areas on roof decks,” said Aleksandra Scepanovic, Managing Director of Ideal Properties Group.
Eleonora Srugo thinks the desirability for a building gym will increase but look a bit different “since the future of group fitness is still up in the air.” She believes that buyers will be looking for spaces that allow for personal training, leading many buyers to “seek smaller sized buildings with fewer neighbors but that still have a fitness facility.” Lisa Lippman envisions residents having to sign up for time slots to use gyms, saunas, and steam rooms.
Jacqueline Urgo makes the interesting point that “virtual amenities such as live-stream classes for fitness, yoga, and meditation have soared in popularity since the pandemic began,” and she feels that they’ll continue to be on offer. Likewise, Nestseekers agent Jennifer Alese said, “At new developments such as 196 Orchard, they’ve done a great job at implementing wellness amenities like CARAVAN Wellness, a digital hub of classes offering tips, techniques and routines for holistic health covering everything from breathwork to Pilates to hair health.”
Elevators seem to be another big concern for buyers. “Once-coveted amenities such as having a residence on a high floor might lose popularity for a while – because in order to get to your penthouse, unless you have a dedicated elevator, you may be extremely close to other people en route to your home, every day,” said Scepanovic.
Hamptons? Connecticut? Jersey? Expect an exodus
Agents that deal with adjacent Tri-State areas have been seeing a lot of increased interest from buyers currently living in New York City. Sure, some have made the snap decision to relocate to the ‘burbs, but others are just crossing over sooner than they originally planned. This is what Compass’ Zander Oldendorp, who deals primarily in the Summit area of New Jersey, has noticed. He’s also noticed that buyers are willing to buy farther west than they would have previously since many people will be commuting into the city less frequently if at all.
And when it comes to summer rentals, things are even busier. In fact, a recent New York Times article described the Hamptons summer rental market as a “feeding frenzy.” The Times explains that with so many New Yorkers looking to flee the city, brokers are seeing “a frantic competition for desirable properties, with some renters fearing they could be left out of the market for the first time in years.”
Shelley Scotto, who works for Compass on Long Island, has had a lot of inquiries for summer rentals, which isn’t the norm in the area of Manhasset where she primarily works. Christopher Finlay of Halstead’s Greenwich office has noticed a similar trend in Connecticut. He saw an initial surge of people from the city looking for short-term furnished rentals, something uncommon in the area. However, he and other local agents are working with homeowners who currently have properties on the market to create these short-term rental opportunities, a trend he expects to see continue.
When it comes to what buyers are looking for, both Finlay and Scotto have seen more clients looking for homes with pools. Scotto also notes a shift in buyers looking for that extra bedroom to use as a home office or homes close to schools so parents don’t have to worry about their kids getting on the bus.
It will be a renters’ market
With many New Yorkers fleeing for the summer or permanently, units up for rent are way up. Listings website CityRealty saw 7,793 rental listings in early January. Buy mid-April that number had grown to 8,244 and as of May 15, it was 10,641. There’s also the remaining uncertainty that won’t be quick to dissipate for some. “In the short-term, people may be more inclined to rent than buy, because the commitment is less if they need to choose a place sight-unseen,” said Jared Antin.
POSTED ON THU, MAY 21, 2020BY DANA SCHULZ
If you are weighing your options and considering relocating, give us a call. We can help you evaluate your options and the financial impact of moving.
Buying your first home can be an intimidating process, as there are many steps involved before you can move in and begin this new chapter of your life. From determining a budget and applying for a mortgage to hiring a real estate agent and making an offer, the experience will take time and require patience, organization and research. There are also some common misconceptions about purchasing a home that buyers should be aware of, especially those who’ve never been through the process before.
Here are six first-time home buyer myths, along with the facts debunking them:
#1: You should find a home to buy before applying for a loan. (False)
Motivated sellers aren’t going to sit around and wait for a buyer to obtain a mortgage loan. Instead, they’re going to accept the best offer. For example, if a buyer makes a healthy offer on a home, but he or she hasn’t applied for a mortgage loan, the seller will likely be less inclined to agree to such a deal. This is because getting approved for a loan takes time, and the buyer may not receive enough funds to pay top dollar for the property. Consequently, it’s important for buyers to at least get pre-approved for a mortgage loan with a reputable mortgage lender before starting their search. This way, they’ll be prepared to put their best foot forward when they find the right property and prove to be a serious buyer to sellers.
#2: There is only one type of loan you can apply for. (False)
Some first-time home buyers may not realize there are several types of home loans available. While they may not qualify for all, they’ll likely have more than one option. Besides the conventional mortgage loan, there are also Federal Housing Administration (FHA) loans, U.S. Department of Veterans Affairs (VA) loans, U.S. Department of Agriculture (USDA) loans, and the Fannie Mae HomeReady® Mortgage, among others. The key to determining which financing option is the best for you is contacting a lender who can explain what each loan entails, as well as the requirements and information needed to apply.
#3: You need to pay a minimum of 20 percent down. (False)
Twenty percent of a property’s purchase price is the standard down payment. However, it’s not the only option. Depending on the type of loan obtained, the minimum down payment requirement will vary.
Take FHA loans, for instance. These tend to have more flexible qualifications compared to other mortgages. As stated by the U.S. Department of Federal Housing and Development (HUD) on its official website: “Your down payment can be as low as 3.5% of the purchase price” with an FHA loan. Factors, such as credit score, will play a role in determining what someone’s down payment requirements will ultimately be. Still, this could help buyers save a significant amount of money.
#4: You don’t need the help of a real estate agent. (False)
Getting assistance from an experienced and reliable real estate agent can be extremely advantageous. They can not only assist in finding potential properties within your budget, but can also be instrumental in helping negotiate a purchase price and explaining who’s who at the closing table, as well as other important details pertaining to the home-buying process.
Real estate agents can lend a helping hand when it comes to choosing a lender, as well, since they’ve likely worked with different lending companies and mortgage loan originators. Therefore, they may be able to shed some light on which lender tends to provide the fairest rates and best customer service.
#5: The only thing you have to worry about is making the down payment. (False)
Being able to afford the required down payment for a new home is obviously an important factor for a prospective homeowner. There are other costs involved in the purchase that first-time home buyers may not be aware of, however. Buyers are often expected to pay closing and moving costs, as well as (if applicable) appraisal costs, homeowner’s insurance, title insurance, and private mortgage insurance, among others.
#6: All mortgage lenders offer the same loans. (False)
Not all lenders provide the same loans. Take FHA loans, again, as an example. Only FHA-approved lending companies can offer these. That means anyone interested in securing a FHA 203(k) loan, for example—a loan providing funds to purchase and renovate a home—would need to obtain approval from such a lender. Besides asking a real estate agent, borrowers can locate these via a search tool on HUD’s official website, as the FHA is a part of this government department.
Published by Contour Mortgage , March 19 2019
If you are interested in getting more information about financing and mortgage options, please feel free to contact us.
Editor’s Note: The New York State Association of Realtors released the following column for Realtors authored by Harris Beach Attorneys at Law, PLLC in respect to recent rent regulation and tenant protection legislation that was signed into law by Gov. Andrew Cuomo.
BACKGROUND: On June 14, 2019, the Governor enacted sweeping legislation expanding certain rent provisions statewide and altering the relationship between landlords and tenants in residential real estate.
NEED TO KNOW: EXPANSION OF RENT REGULATION: The Emergency Tenant Protection Act of 1974 (“Act”) was expanded as part of this sweeping legislation. This Act established the system of rent stabilization and regulated rent as seen in New York City, and could be expanded to any village, town, or city if the local legislative body passes a resolution upon adequate public notice declaring an “emergency” after a finding that vacancy rates for any or all classes of housing are 5% or less.
TENANT PROTECTIONS: The legislation also strengthened the substantive rights of residential tenants against landlords while bolstering tenants’ procedural rights in the face of an eviction. Notable provisions include:
NEW TENANT PROTECTIONS
1. Landlords Must Mitigate Damages: A landlord is obligated to mitigate its damages in the event a tenant breaks a lease. For instance, a landlord must now attempt to re-lease the premises.
2. Security Deposits Limited to 1 Month: In non-rent stabilized units, a deposit or advance shall not exceed the amount of one month’s rent.
3. Application Fees are Prohibited: A landlord cannot seek any payment for the processing, review, or acceptance of a rental application.
4. Background Fees are Capped: Reimbursement for background and credit checks are limited to the lesser of the actual cost or $20.
5. Late Payment Fees are Also Capped: A late fee must be the lesser of $50 or 5% of monthly rent.
6. Self-Help is Criminalized: It is now a class A misdemeanor for a landlord to evict or attempt to evict a tenant who has occupied a dwelling unit for 30+ consecutive days without a warrant of eviction or order of a court. Civil penalties can range from $1,000 to $10,000 for each violation.
7. Strengthened Protections Against Retaliatory Evictions: A landlord cannot serve a notice to quit or commence an eviction proceeding against a tenant who made a good faith complaint to the landlord or landlord’s agent about the warranty of habitability, duty to repair, or other law.
8. Notice: A landlord must now provide tenants with notice ranging from 30 days to 90 days if the landlord intends to increase rent by 5% or more or does not intend to renew the tenancy.
1. Damages in Eviction Proceedings are Limited: Additional rent, fees, charges, penalties, and costs are no longer recoverable from a tenant in an eviction proceeding.
2. Grounds for Eviction can be Rendered Moot if Tenant Makes Full Payment Prior to Hearing.
3. Stays for Warrants: A tenant can halt issuance of a warrant of eviction for a period of up to one year, increased from six months.
4. Timing of Eviction Proceedings: Time periods for eviction proceedings were modified and often increased to the tenant’s benefit. For example, a landlord must give 14 days written notice (up from three) demanding rent or possession prior to commencing a proceeding; tenant now has the right to adjourn trial for 14 days as of right; officer executing warrant must deliver 14 days written notice prior to evicting a tenant(s).
5. New Defense to Eviction Proceedings: A landlord or its agent must provide written notice to a tenant of late rental payments not received within five days of the due date. Failure to deliver written notice can be raised as a defense in a later eviction proceeding.
This publication was prepared by Harris Beach PLLC for the benefit of the New York State Association of REALTORS, Inc. If you have any questions concerning the above please contact Mike Kelly or S. Anthony Gatto at 518-463-0300.
CID to Meet on Aug. 7 to Discuss New Rent Regulations
The Hudson Gateway Association of Realtors’ Commercial Investment Division and the Bronx-Manhattan North Association of Realtors have scheduled a breakfast seminar on Wednesday, Aug. 7 to discuss the impacts of the new rent control regulations in New York.
The “The New Rent Laws – What Happens Now?” seminar will be held at the Hutchinson Metro Center (1200 Waters Place) in the Bronx and will begin at 9 a.m. The seminar is free of charge to attendees.
Clink on the link to access NYSAR Reforms to Tenant Landlord Relations (pdf):