By: Kelly Alvarado
New real estate listings are down by 70 percent in New York during April, which is normally one of the busiest months, according to analysis by real estate strategist Mike DelPrete. In Manhattan, contract signings are down 25.1 percent from March and down 32.1 percent compared to last year, according to Urban Digs, a website that offers real estate data.
Cuomo’s March 20 statewide PAUSE order, banned open houses and in-person property showings. Agents, buyers and sellers are limiting physical contact and some are choosing to have tours virtually, or not at all. The supply of inventory on the market dropped 12.1 percent, according to data from the New York State Association of Realtors.
“There are very few end-users who would feel comfortable making an a seven-figure real estate investment without actually seeing it first, and there are many buildings that understandably will not allow access, and of course this assumes there’s a real estate agent that’ll show property right now and the tenants will allow people in their home,” Steven Gottlieb, a real estate agent from Warburg Realty, said. “For the most part, the public is taking this shelter-in-place mandate very seriously.”
The coronavirus has caused business to slow and sellers to delist their homes, hindering new ones from coming in. In the second week of April, 52 listings came onto the market in Manhattan — compared to 476 the same week last year, according to UrbanDigs. The decrease in the number of listings on the market can in turn produce good investments for individuals who are able to buy. The possibility of recession, however, leaves prices on the real estate market in question.
“We’re seeing this time seasonally around March and April when a lot of sellers put their homes on the market, and right now we’re seeing a dramatic decrease,” Jared Antin, director of sales at Elegran Real estate in Manhattan said. “New listings are down 87 percent in April month to date compared to what it was in April 2019.”
In addition to the quarantine, the shift to online platforms has caused business to slow down for realtors. Web traffic to real estate portals like Zillow and Redfin has dropped by almost 40 percent in the last few months due to the coronavirus, according to data by DelPrete.
“I have rented one apartment through a video, but that’s about it,” Frank DeLucia, an associate real estate broker at Century 21 in Long Beach, said. “Right now we’re at a standstill.”
There are approximately 167,000 real estate agents and brokers with active licenses in New York, and sellers are being extremely careful during this time, as most would not allow in-person showings due to the pandemic. In the National Association of Realtors’ (NARS) March 16 survey, approximately 60 percent of realtors surveyed said that sellers had taken extra precautions when showing their homes or have decided to avoid showings completely.
“Realtors are not showing, open houses aren’t happening and no one is listing properties within their right mind,” Armen Meschian, a broker at CORE Real Estate, said. “For a lack of a better word, the marketplace is closed.”
Many closings that have gone into contract before the pandemic are still being executed.
“Transactions that went into contract a couple of months ago that are closing now… are a little bit slower, but the transactions are still moving forward,” Paul Greenstein, a sole practitioner in Huntington who handles real estate transactions, said. “What we’re doing is having people sit in different rooms or offices on different days, wearing masks, and we’re being as safe as we can be, so we’re not have more than a couple people sitting near each other at the same time.”
About 16.8 million people have filed for unemployment in the past three weeks. Job losses and lower incomes may also hinder buyers’ ability to invest in real estate.
“This current situation is far more severe than anything we’ve seen in the past in terms of unemployment,” Gregg Delany, an adjunct instructor at the Schack Institute of Real Estate at New York University, said. “While the next 18 months are likely to be uneasy, we won’t see anything like the Great Depression, which was more like three to four years of recession year over year,” Delaney said.
In the 2008 recession, a banking crisis and the loss of housing wealth was the problem, according to Investopedia. Today, economic issues stem from losses of income for individuals hurt by coronavirus-related public health measures. Due to the fast government response and closure of the economy, this recession could be different, Delany said.
“We have never seen a situation where the economy effectively stopped in less than 30 days,” Kevin Clark, another adjunct instructor at the Schack Institute, said. “Fewer people are able to afford houses or feel comfortable enough with their job security to invest in a house. Interest rates are low, but banks will need to be incentivized to lend since their own balance sheets are likely to see bad debt pressure from non-payment of mortgages, credit cards and general loans.”
Between April 19 and 20, out of 3,000 agents surveyed by the National Association of Realtors (NAR), 64 percent said buyers expect a decline in home prices, with the largest share of those predicting a drop between 5 percent and 10 percent.
“I think short term, it’s probably a good time to wait to see how the economy stabilizes,” Clark said.
During the pandemic, there has been little to no change in housing prices. 74 percent of agents currently working with sellers said none have reduced the price to attract buyers, according to the NAR survey. Of those agents whose clients have reduced their prices, the majority reported price reductions of less than five percent.
“I don’t think the coronavirus will affect house prices too much in the long-run, especially in New York City environments,” Frank Baraconi, another adjunct instructor at the Schack Institute, said. “In this market, there are so many high-income renters it serves as a shock-absorber for the home market. If home prices sink too far, there are always many affluent renters who are ready to pounce on a good deal. But all that depends on how long the economy remains partially shut down. If a secondary recession sets in, which seems likely, it could suppress home prices for a few years.”