What Does New York’s Reopening Mean for the Real Estate Market?

Josh Arcus, Sophie Ravet, Roberto Cabrera, Ari Harkov

The streets of New York City have re-energized in the past few weeks. As more New Yorkers get vaccinated, restrictions are being relaxed, stores are reopening, and there is a strong sense that things will soon be “back to normal”. For a city that has been badly hit by the pandemic both in terms of COVID-19 itself and economically, this recent change is a long-awaited one.

The city’s real estate market has been one of the hardest hit sectors, with reports that an unprecedented number of New Yorkers have fled the city in search of more space and less populated areas. However, in recent months, reports have shown that many New Yorkers are returning, with a study of postal data predicting that more people would be moving into the city than they would be leaving by mid-2021. The real estate market has caught up and in the first quarter of 2021, not just since the beginning of the pandemic, but in the last six years, has the highest number of purchased apartments in Manhattan.

To get a better understanding of how the New York real estate market is performing, we spoke to four top real estate agents from Brown Harris Stevens, the largest private real estate company in the Northeast. Brokers Joshua Arcus, Sophie Ravet, Ari Harkov and Roberto Cabrera are regularly named among the top brokers in the country. With decades of experience in the competitive New York real estate market, you’ve seen many types of markets. They share their expert insights into the latest New York City real estate, as well as their advice to buyers and sellers.

What’s the latest in the NYC market based on what you’ve seen with customers and in the field?

Joshua Arcus: Residential property sales remain extremely hot in all price ranges, sizes and neighborhoods. Rents have risen sharply, particularly on the Upper East Side and now more in Midtown, where people who lived (or want to live) close to work are moving.

Plus, the large-scale return of employees to the offices, coupled with NYC’s announcement that schools will be 100% personal for the next year, let commercial landlords see some light at the end of the tunnel – even if it’s not until 2022, especially for restaurants and eateries that focus on the working crowd Monday through Friday. They are betting on historically low prices in the expectation that the offices will be occupied by 75-100% this fall.

Sophie Ravet: Sellers gain confidence and buyers don’t want to miss the opportunity to get a good price. We see bidding wars and closings over demand. Both sides feel that they have hit rock bottom.

Ari Harkov: The NYC market is incredibly active and liquid, meeting or exceeding the transaction volume of all time, with demand exceeding supply. Prices in most sub-markets are slightly below or slightly above pre-COVID levels, and we have seen a more or less complete recovery from the COVID discounts from a value point of view.

Roberto Cabrera: Inventories pour into the market every week, sellers are more realistic and huge amounts of deal volume are the result. Buyers are increasingly realizing the value of low interest rates and fair prices. I haven’t seen this volume in my 23 year career. Competitive situations are quite common. We are on the verge of another price increase.

How will the NYC reopening affect the real estate industry and real estate market?

JOshua Arcus: Midtown will fill up again very quickly as the offices are 100% occupied. Companies that support office workers (administrative staff, delicatessen and restaurant workers, etc.) will all return as well. There will be a crazy lead to the last available deal. The rental market will stabilize and the sales market will continue to improve (probably earlier than early 2020) as people take advantage of the mortgage rates, those who have sold in the suburbs move to the city and foreign buyers return to the buyer.

Sophie Ravet: The reopening of NYC is aided by the vaccination of the New Yorkers. The fear of living in a densely populated city is slowly disappearing, so those who left a year ago are coming back. The news is out and I even see many West Coast shoppers buying pieds-à-terre in New York. All of this affects the sales and rental markets.

Ari Harkov: Our market has always been much more dependent on local buyers and tenants than the media report. With this in mind, there is a significant flow of capital from domestic and international buyers into our markets, and our leasing market relies on personal workers who want to live in the city close to their offices. NYC reopening can only help the real estate market.

Roberto Cabrera: There is security and a sense of “normality”. People will want to join the party more and more.

Where is the market headed? What can we expect in six months and beyond?

Joshua Arcus: Prices will rise when stocks run out. The only thing that could change about that would be a lot of new offerings coming out and there are no immediate signs of this.

Sophie Ravet: There will be strong buying activity and prices will slowly rise for the first time in several years.

Ari Harkov: When offices reopen, city facilities reopen, tourists and commuters return, vaccination rates rise, federal aid pouring into the city and the MTA, and more, the outlook is incredibly positive.

Roberto Cabrera: I believe that this noticeable level of activity will also remain strong in the summer. After that, I see that the activity remains robust, but a little more subdued. Buyers realize that the best deals are now. You may have missed the bottom, but not the recovery. In a few years, those who have bought now will have a sense of achievement, while those who haven’t will wish they had.

What is your advice to someone looking to buy in NYC now / soon? Your advice to a seller?

Joshua Arcus: If you want to buy, be open minded and force the sellers to meet you where you want to be priced. If you want a very specific apartment, it will be difficult because there is not enough inventory. For sellers, I would say that you make sure that your apartment is in the best possible condition – both in terms of price and physical condition. Ideally, a buyer should think about what their listing will be, rather than the cost of the renovation. In all cases, the price is decisive. Anything that is not precisely tailored to the price of the surrounding competition will not be sold / rented.

Sophie Ravet: Don’t make an impulse buy, but be ready to pull the trigger because there is competition. My advice to sellers is to remember that we are still in a price sensitive market. They will sell when the price is right, but you will miss out on great buyers if they are above market value.

Ari Harkov: From a buying perspective, the prices are incredibly low, the values ​​are more or less at the pre-COVID level (which had already decreased slightly from 2018 to the beginning of 2020) and our market did not experience the price jumps that were seen in so many markets in the USA and the World last year. From that perspective, NYC is still a discount.

NYC reopening will only help drive sales and rental prices soaring. If you have a healthy horizon of over 5 years, now might be a good time to buy. If you are looking to sell your property, be it for a swap, move, or otherwise, now might be a good time to sell. Correctly valued properties sell quickly and in many cases with multiple offers.

Roberto Cabrera: In the past two decades, there have been few times when virtually all of the key metrics have been in the buyer’s favor: inventory is plentiful (meaning you have a choice), prices are moderate (meaning value), sellers are more realistic ( i.e. negotiability) and interest rates are at all-time lows (meaning you have tremendous purchasing power). Buyers should get pre-approved a mortgage to understand what they can afford and get in.

Sellers have to get on and off, which means they need to set the right price and get it done. You should know that the most intense activity and the best offers are at the beginning. After that, the intensity subsides – you have a dwindling wealth. Sellers should reach out to an experienced broker who understands what it takes to create and orchestrate the right marketplace for their home. This and your negotiating ability is what you pay for.