What's Happening With Property Values?
This is Manhattan's Trillion Dollar Question....
There is insufficient post-COVID sales data to ascertain what has happened with property values. Properties that came on the market or went into contract post-COVID (mid March 2020) have not yet closed, and there is no way to know contract prices. Properties that closed since mid March went into contract pre-COVID.
The typically robust Spring market has been PAUSED... halted in its tracks. The NY State directive to not show properties has been in place for more than two months. The number of newly signed contracts in this period is down by approximately 80% from last year, and the vast majority of buyers of these properties visited pre-COVID. The number of new listings is down similarly by 80%; many sellers have taken their homes off the market temporarily, adopting a wait-and-see attitude and not wanting buyers visiting their homes regardless of the safety precautions taken.
Buyer demand has mimicked seller supply. As an economics major in college, we would expect that prices remain stable, more-or-less. We shall see .... And since demand and supply are both way down, this translates into many fewer transactions. This we already know to be true.
Over the past couple of weeks, as things have started to open up, we feel an uptick in buyer demand and see inventory returning to the market. Nevertheless, serious activity remains limited. Video tours and virtual tours of homes are helpful, but buyers are reluctant to pull the purchase trigger without an actual eyeball-to-real estate visit.
Anecdotally, I can say with certainty that --
There is little seller desperation.
Low ball offers are typically ignored or countered as a courtesy.
Few signed contracts have been renegotiated.
Even fewer buyers have walked away from their down payments.
At this time of year, there are typically 500 new listings a week. Over the past month, there have been approximately 100 new listings a week.
People have left Manhattan for weekend or vacation homes, and young adults living and working in Manhattan have returned to their parents' homes. But these moves are not permanent. Yet.
We are seeing, on average, a list-to-contract price differential of approximately 10%. Pre-COVID, it was just below 7%.
Looking into my crystal ball, I see the following:
When the economy opens up and people feel safe, listings will return to the market, buyers will reappear, and properties that are marketed properly will sell at fair prices.
When all is said and done, we predict an 8 -12% decline in prices, but we expect the market will bounce back quickly. There was already a price adjustment, pre-COVID.
Not all segments of the market will respond equally, especially as buyer appetite for homes shifts. Expect buyers to pay a premium for move-in ready, private outdoor space, in-unit washer dryers and less of a discount for low floors.
It is necessary to closely track market activity, spot trends and understand the social and economic dynamics in order to prepare for what's to come. We have become data geeks and analyze the reports daily. Be in touch to discuss what's happening in your world, and where the opportunities will be.