Brokers in New York City are bracing for more realistic prices as supply outstrips demand.
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As the New York City real estate market starts its march toward recovery, sellers are starting to peek out of quarantine and list their homes, but there’s no promise that buyers will be following.
The third week of May saw the fourth weekly increase in new listings, up 11% to 147 from the week before. However, buyers mostly stayed home, and contracts signed fell 21% over the same period.
“The current market dynamics of rising overall supply, combined with dampened demand suggest that sellers who need to sell will need to cut their prices in order to compensate for the lack of physical viewing,” said Noah Rosenblatt, the founder and chief executive officer of UrbanDigs.
At the same time, the anecdotal tales of residents fleeing the city for the safety of personal space in the suburbs are grounded in data.
On a year-over-year basis, demand for Greenwich, Conn., was up 65%, UrbanDigs found. Demand was up 22% for both Westchester County in New York and Monmouth County in New Jersey and up 21% for Bergen County, N.J. At the same time, when the relative demand curve for Manhattan was adjusted to include only pending sales done after the implementation of stay-at-home orders, the drop in demand was 65%.
This will likely create oversupply in Manhattan, lowering prices in the city while pushing them up in the suburbs, Rosenblatt said.
Agents say their listing clients have had to adjust to the hard reality of pricing amidst the pandemic.
Jeremy Kamm, an agent with Warburg Realty, said that before the pandemic began he had been working with two separate sellers on pricing for their listings.
“Week after week as circumstances worsened, we have continued to discuss pricing so that we are ready when the time comes,” Kamm said. “The number that we are entertaining today is certainly different from the number that was originally considered. In both cases, these sellers understand how the market has shifted, and are prepared to list their homes for less than the pre-pandemic numbers we had intended.”
Kamm said that motivated sellers will heed the advice of their brokers when considering how asking prices are determined.
“Today’s environment is incredibly different from anything we have dealt with in the past,” Kamm said. “It is not just a matter of reviewing the comps. You must also take into account the possibility of restrictive lending practices by financial institutions, how much of the process must be achieved virtually and the challenges that brings, as well as buyer behaviors and their assumptions with respect to the market’s response to coronavirus.”