September Market Update
As we approach the end of Summer, New Yorkers are soaking up the remaining perks of this sun-drenched season. For some, that means packing a picnic to enjoy the relaxation and sprawling landscape of Central Park; for others, it’s heading out east to savor those final magical moments at the beach. City dwellers are especially enjoying all the expanded outdoor dining that resonates with our al fresco dining culture. Even during these extraordinary times, we hope everyone has been savoring these long days and a bit of well-deserved relaxation. The LevinKong Team extends its sincere wishes for a very happy, fun, and safe Labor Day weekend.
Many of the city’s home-owning residents have spent most (or all) of the summer at their second homes, or their rented getaways. After Labor Day, we will see the majority of these NYC residents return. Currently, we’re seeing a trend where a good number of the city’s renters have given up their rental apartments for the short-term – often moving back home with family until the city is more fully opened – or deciding to buy in one of the city’s many suburban markets. These were inevitable migrations hastened by the current climate, as most of these renters were living in apartments not realistic for their long-term needs, with ownership of property currently unattainable for them.
The stories of a “mass exodus” from cities in general, and NYC specifically, are not supported by sales data. The story really is one of a renters’ hiatus from the city. Our market has been open for two months post lockdown. Our closing lag is typically 2-3 months from a signed contract, due to the drawn-out nature of our condo and co-op transaction processes. We only saw 158 signed contracts across all of Manhattan last week. Average listing discount of listings prior to signed contract was approximately 5%. These are not the data points of the city’s homeowners’ mass migration. NYC homeowners, particularly in Manhattan, have on average over fifty percent equity in their properties. If flight was the goal, they have the ability to offer much larger discounts, and we would be seeing significantly more opportunistic buying.
That being said, there is certainly opportunity for buyers in most market segments, particularly so in new construction and luxury categories. Inventory levels are not supported by the current level of demand. Interest rates remain incredibly low, and leading up to a Presidential election, that will predictably remain that way for the rest of the year. There is a strong possibility that we could see interest rates rise in 2021 in line with inflation, resulting from economic stimulus efforts pumping money into the economy.
When we came out of COVID lockdown in late June and early July, inventory in the city initially spiked. However, inventory levels have been leveling off for weeks, with this past week being the lowest level of new supply. Summer in the city is always slow moving, and with COVID concerns and many of our residents away for the summer, we don’t anticipate true clarity on the market until late September or early October. Because of this, buyers and sellers can try to take advantage of specific situations before the comparative data solidifies the true market correction.
Where we are currently seeing the highest demand, is the single-family home markets in Brooklyn, Queens, and Long Island. In Manhattan, we are seeing many new homebuyer searches focusing on smaller buildings with private outdoor space. Subsequently, many investors are starting to look toward these types of properties as well.
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 enable 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. Enjoy these remaining days of summer, and be well.