A November to Remember
I was inspired by a piece written by my friend, Ben Blumenthal. With his permission, I will share some of his ideas and offer some thoughts of my own. As the saying goes, “markets hate uncertainty”. Well, there has been plenty of uncertainty over the past eight months, including a spike in the positivity rate for COVID-19 cases that has led to a second round of school closures in NYC, and the heightened concerns about the rate of post-Thanksgiving infections. Hopefully there is light at the end of the tunnel. November brought great news with encouraging vaccine announcements and the conclusion of the U.S. Presidential election. These developments translated into big gains in the stock market and an overall improvement in energy and
outlook. Consumers reacted positively to Black Friday, Small Business Saturday and Cyber Monday that have lasted throughout the month.
Unfortunately, the hospitality segments of our economy, including tourism, theater, restaurants and nightlife, remain largely "on pause", and many have lost their jobs and their businesses. This has hit NY particularly hard. Luckily, so far, there have been few short sales or foreclosures.
The market for weekend and vacation homes boomed outside The City, as has the demand for primary residences in the suburbs. Some NYC owners took a wait-and-see approach, while others abandoned Gotham and put their properties on the market. Those who left were likely to leave anyway; COVID merely accelerated their plans. The commercial rental market focused on how and when workers will safely return to their offices. Issues remain relating to the long-term impact and imprint that COVID-19 will leave on organizational models, purpose and function, including how we will work, and from where. Questions remain about public transportation to and from offices.
Investors are wary. This is a terrible time to be a rental landlord with a moratorium on evictions and so few tenants looking to rent. This was the slowest summer rental season in my twenty plus years in the business. Renovations are delayed even more than usual, and the costs of materials have skyrocketed. Foreigners face difficulties traveling and moving their money here.
With people uncertain about whether their children will attend school in person or virtually, and whether they will work from home or return to their office, their housing needs are in flux. Is it better to live close by a central business district, or okay to be more distant? What are the housing priorities - private outdoor space, more square footage overall, more private spaces for work and study, better equipped kitchens, in-unit laundry? Is now the time to spend more on housing since we spend more time at home, or should we save? Should a property owner move, or renovate? And if the choice is to move, better to sell now or rent and sell later? Or just keep it empty?
Buyers did return to the market in response to their changed housing needs, but without the urgency we might have expected given the historically low mortgage rates, ballooning inventory levels and sellers' willingness to negotiate. Many just stayed put.
Renters continue to remain on the sideline. With shallow roots and the advantages of living in NYC temporarily shut down, they were the first to flee and haven't yet returned.
The real estate issues are many and complex, both on a micro level and a macro level. Yet while there may be challenges, there has never been a greater window of opportunity to build wealth with real estate. The window is open, for now, but I sense that it will close quickly, and soon. Depending on their unique circumstances, I'm advising my buyer clients to find a property they love, negotiate a killer deal and pounce, and I'm advising my sellers to pause and consider their motivations and options.
Ben ended his piece with a quote which left a strong impression: “Not all storms come to disrupt your path, some come to clear the path.” As we turn the calendar on November and consider what's in store for The Holidays and 2021, I feel certainty and comfort returning, and clearly see the opportunities. I'm confident in the future. Bring on December, and beyond!