December Market Update
As we take a deep collective breath at the end of this unconventional year, we have much to be optimistic about as we look forward to the upcoming year. We at the LevinKong Team hope that you and your loved ones are well and that the holiday season ahead gives us all a much needed respite from all that we have experienced.
New York City typically has two robust selling seasons, one in the spring and a shorter one in the fall. This year, our spring selling market was nonexistent, and the reopening of the city occurred in summer. By then, many of the typical buyers and sellers of real estate had retreated to second homes or rentals outside of the city; this meant that the NYC real estate year essentially had one very short season – from September to December. It wasn't a floodgate of demand early in the fall, but as the city's well-heeled residents began to return and get back to something closer to normal, activity has begun to pick up. Supply leveled off in November and deal volume picked up. With the recent spike in Covid cases, and the the holiday season upon us, we are anticipating that much of this year's activity is going to wind down. That being said, opportunistic buyers will be able to take advantage of listings that haven't sold, and lower levels of competition, to achieve deals that may not be attainable next spring.
The NYC real estate market, the stock market, and New Yorkers in general are all demonstrating an expectation that a return to normal is imminent. We are not out of the woods yet, but the promise of vaccines, a new political climate, and the potential repeal of the SALT cap have us very bullish on NYC real estate in the long term. This won't be a faucet that just turns on, but rather a process, and good deals should present themselves in vulnerable market segments for at least a year or two more. Higher price points and new development properties have levels of supply that will take multiple years to recalibrate back to normal levels. Personally, we have been having many conversations with second home buyers from outside of the city, foreign investors, and many would-be-buyers who had been sitting on the sidelines, but are now looking to take advantage. Our clients from across the country and around the world – from Asia, the Middle East, and Europe – have been reaching out to us at levels that we haven't seen in years, as they see this as a rare buying opportunity. And they plan on betting big on the future of New York City.
We do anticipate that the sub-$2 million market will benefit more significantly, and sooner, from the incremental return to normalcy that next year promises. This segment of the market is more heavily tied to interest rates as well, and the historically low rates should be sticking around at least throughout the first half of next year. Many New Yorkers held off making moves within the city, buying their first homes, or making investments due to the volatility, uncertainty, and general hurdles surrounding making purchases during the pandemic. That is certainly going to change next year. While we do expect a significant uptick in transaction volume, we do not expect the normal tie to sharp price increases that this would typically be accompanied by, however. Buyers will be buyers of value.
There still is not just one NYC real estate market. There are many varied market segments, each performing at different levels. For instance, the two bedroom co-op market in both Greenwich Village and Chelsea are seeing more than half of their current inventory in contract, 62% and 53% respectively. The three bedroom condo market in the Upper West Side, at the same time, has only 19% of its current inventory in contract. There will be many opportunities for current NYC property owners to trade within the market and take advantage.
With proper guidance, there are many ways to take advantage of this dynamic and intricate market. More than ever, a data-driven, research-based approach, rooted in decades of experience, will equip our clients to thrive in this environment. Please stay safe and let us know if we can answer any questions you may have about the market, or how best to navigate complicated decisions.
Happy Holidays and all of our best wishes!