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For New York’s real estate industry, spring is typically the busiest time of the year: New condo developments ramp up their sales launches, renters are looking for new apartments, and sellers are eager to list their homes.
But this year, things are drastically different. New York City is the country’s epicenter of the COVID-19 pandemic, and most of the state is on lockdown in an effort to stem the spread of the novel coronavirus. That includes the real estate industry—though it’s been deemed essential under Gov. Andrew Cuomo’s PAUSE order, market activities are virtually impossible to conduct with strict social distancing guidelines in order.
“As things really escalated, [the industry] came to a grinding halt,” says Christopher Totaro, an agent at Warburg Realty.
In the weeks since Cuomo and Mayor Bill de Blasio declared states of emergency in the state and city, the real estate industry has stopped operating as normal. Inventory has dropped dramatically, as potential sellers spooked by the current climate hold off on listing their homes. Agents have pivoted to virtual tools, from using FaceTime to show apartments to conducting closings via Zoom. And while some insiders are bullish on the industry’s ability to bounce back once the COVID-19 pandemic is contained, the economic uncertainty that the crisis has created may have lingering effects.
“How long does the virus footprint stay expanding over the market?” says Jonathan Miller, president and CEO of the appraisal firm Miller Samuel. “The longer the outbreak, the greater the damage to the economy. It’s one thing to have low [mortgage] rates, but if you have a higher unemployment rate, you have fewer people who are able to take advantage of it.”
For those who wanted to buy a home in 2020—or who may already be in the process of doing so—there are likely many questions about how, exactly, things have changed. Curbed asked real estate agents, analysts, and industry insiders for intel—here, find everything you need to know in this rapidly evolving situation.
Can you even buy a home in New York City right now?
Yes, but experts disagree on whether now is the right time to buy.
For one thing, the traditional ways of seeing apartments—open houses and broker walk-throughs—are not permitted under the state’s current PAUSE order. Inventory is down, and it’s still too early to say how the pandemic will affect home prices. And the entire process is taking longer because of challenges posed by social distancing guidelines—e.g., not being able to do in-person appraisals or closings.
“It’s hard to think about real estate unless you’re right in the middle of something, and your buyers and sellers need to complete it to get to the finish line,” says Totaro. “My advice to buyers is stay put, focus on the task at hand, enjoy those precious moments with your family as they come up. And for my sellers, if you absolutely don’t have to sell today, then don’t.”
Miller also believes that it might be better for buyers to hold tight. “This hoopla about low rates is a bit overstated,” he says, in reference to the Fed cutting rates—and thus, “it’s not a default assumption that you’ll get cheaper financing.”
That said, some agents are bullish about buying in the current climate. “I see this as very much an opportunity market for so many people,” says Bess Freedman, CEO of Brown Harris Stevens. “If [buyers are] committed to the process and they can find what they want, they can probably really pick and choose and negotiate a little more than in usual times.”
How are real estate agents currently showing homes?
Right now, the only way a potential buyer should be seeing a home is through the magic of the Internet. Guidance from New York state mandates that any real estate transactions be conducted virtually, a shift that many brokerages had already made as early as the beginning of last month.
“We’re doing dozens of virtual showings,” says Eric Benaim, the CEO of Modern Spaces, who says that one of those showings even led to a sale.
That might mean an agent showing a client a home through FaceTime, Skype, or Zoom, or uploading a video tour of a space to YouTube. The brokerage Compass unveiled an entire lineup of tools for its agents—including ones that allow for 3D staging, virtual open houses, and interactive one-on-one tours—that are intended to make the showing process more seamless. SteetEasy rolled out 3D Home tours, which allows agents and landlords to take 360-degree panoramic photos and create a 3D tour with their iPhone.
Are sellers reconsidering listing their homes?
If inventory is anything to go by, the answer to this is a resounding yes. Spring is typically a very active time for the NYC market, but “that whole dynamic is in reverse,” according to Noah Rosenblatt, the CEO of real estate data firm UrbanDigs. “There are far fewer new listings coming on.”
According to the latest report from UrbanDigs, 52 listings came on the market on the second week of April compared to 476 last year—which is a staggering 89 percent decline. During the same period, there was a 77 percent decline in contracts signed—55 this year, compared to 243 last year—and a 17 percent increase in listings taken off the market.
“The pace of supply is declining faster than the pace of demand is declining,” he says.
“If you don’t have to put it on the market right now, it’s probably better to wait,” says Freedman. “I wouldn’t encourage people to put listings on right at this moment—it’s less than ideal.”
How is this affecting home prices?
In short: It’s too early to say. The pandemic has led to a sharp decline in inventory, but price drops have not followed. It’s unlikely that a clear picture of how pricing will be affected will start to take shape for at least another month, if not longer.
“We don’t know,” says Miller. “It’s predicated on how quickly this crisis is resolved. The shorter the crisis, the greater the probability of the release of pent-up demand and a pop in the market. If this drags on for months and months and months, the outlook doesn’t look so good because you’re going to have higher unemployment.”
That being said, people are already looking toward the future, and what happens after the pandemic has been contained. “The big question on everybody’s mind is, What are real estate values going to be like?” says Totaro.
“There’s probably going to be some parts of the high-end market that are going to suffer a bit,” says Benaim. But he thinks that other types of homes—particularly the relatively lower-priced ones that are more enticing to first-time homebuyers—will not experience much of a shift.
“People still have the desire to purchase and sell,” says Freedman. “They’re just waiting for when they can.” Freedman believes once things bounce back “we’ll have a very healthy real estate market.”
Can I negotiate a lower price for a home right now?
You can try, and it’s likely that people will in the current climate. “A lot of people are trying to take advantage of vulnerabilities to perhaps negotiate a better deal,” Freedman says.
“Right now, any buyers that are out there are opportunistic buyers,” says Rosenblatt. “They’re more aggressive than your typical buyers. They’re going to be pricing in the current uncertainty or current situation.”
On the other side of things, sellers who are still trading right now may be facing economic hardship, or need to move out of their home for other urgent reasons—which is something to keep in mind if you’re still house-hunting and think now is the time to snag a great deal.
“It’s the people that are forced to sell that are going to be trading over the next six weeks,” notes Rosenblatt. “The bids they’re going to have to deal with are going to be bids from buyers that are looking to discount and price in the current scenario.”
I’m supposed to close on a home this month. Can I still do that?
Remote or virtual closings are still happening, although it may take longer than it would have in the past. “We’re trying to transition from a tactile, in-person transaction to something digital and remote, and we’re not quite there yet as a process,” says Miller.
An executive order from Cuomo that permitted virtual document notarization through tools like Zoom or Skype went a long way toward moving the closing process online. “That opened up the floodgates to make people able to transact,” says Totaro.
Appraisers and inspectors are also deemed essential under Cuomo’s PAUSE order, so final checks of spaces can still happen—but the person conducting the appraisal or the inspection should be the only person in the home at the time. Other elements of the closing process, such as final walk-throughs and contract reviews, are being held virtually as well.
“It’s a mail-away closing,” Freedman says. “Everybody is figuring it out. We’re doing things electronically, and getting it done. It’s going to be slower and staggered but if people are committed to the process, we’re getting it done.”