Page 8 - CooperatorNews New York Expo 2021

8 COOPERATORNEWS — OCTOBER 2021 COOPERATORNEWS.COM NYC Housing Market Review A Look Back at 2021 BY A. J. SIDRANSKY The last few years have been something ing the effects of the change in tax laws, VID levels, but housing markets, whether ered healthy. We have had over 20 sales of a rollercoaster ride for New York’s co- op and condo markets. After reaching York was ground zero—once again—for other markets, still display heavy volume the spring, with multiple weeks over 40 an historic high in 2016, a number of the first wave of the virus, and at that ear- factors—among them the cap on federal ly stage, useful knowledge about spread In 2020, seasonality was thrown out the ers too—not just foreign buyers, though income tax SALT deductions, overbuild- ing/oversupply in the luxury market, the with the means to leave—i.e., the wealthi- COVID pandemic, and the fractious 2020 est New Yorkers with second homes adds that most of this heavy demand is “the current joke is that foreign buyers presidential election—converged to put outside the city, and young unattached being framed around low mortgage rates. are from Westchester and they are mak- downward pressure on the market. Now workers with remote-work options—did “The market is overly reliant on low-cost ing the move to be near children and get that the election is over, but with the pan- demic dragging on, where might the mar- kets be headed next? The Chicken Little Effect When COVID-19 hit New York City in unprecedented images of a deserted and We’re not looking at a housing bubble cri- the spring of 2020, it landed another blow desolate Times Square flashing around sis. Price trajectory without bank involve- on a co-op/condo market already suffer- election jitters, and overbuilding. New we’re talking about New York, Florida, or per week, and over 30 most weeks since and treatment was scant. Many of those window. “We expect\[ed\] a bump after as travel restrictions ease, we expect to so, and quickly. Pundits declared the end financing. On the other hand, lending value. We will continue to see this.” of the Capital of the World, the self-de- scribed Center of the Universe—which, percent tighter than before the housing Miller continues, “are looking for a value while perhaps understandable given the bubble that caused the Great Recession. proposition—an opportunity to save mon- the globe, was premature, and in hind- sight, a little overblown. “There was this over-the-top assump- tion that New York was dead,” says Jona- than Miller, president and CEO of Miller office workers go back to work, we will Samuel, Inc., a major real estate appraisal have a gradual recovery into 2022. Delta and consulting firm based in Manhattan. does add an additional layer of uncertain- “This assumption proved to be untrue.” ty, but won’t derail it. It’s just postponed it That said, Miller continues, “Normal mi- gration patterns had halted. There wasn’t any inbound until early spring 2021, which correlated with vaccine adoption.” Miller says that the rental market has built. The sheer number of units planned, been something of a harbinger of recov- ery. At present, rental rates have started to construction ran into a headwind with rise in New York City, and are approach- ing pre-pandemic levels. “The rental mar- ket has seen a massive surge in activity in COVID only exacerbated the problem. the last four months,” he says, “which has According to Miller, “The way to think absorbed much of the slack in the mar- ket.” That upswing is worth paying atten- tion to, says Miller, because the sales mar- ket for apartments—both condos and co- ops—generally follows the rental market. excess supply. In a balanced market, we “The COVID discount is compressing look at three years; in 2021, we’re seeing quickly,” says Miller. “Inventory is still rel- atively high, and prices are down about 10 est amount of property coming to mar- percent from pre-pandemic levels. When ket, so the projected absorption sell-out companies bring back their workers, we’ll rate fell to seven years. Based on what we see another surge in price improvement. think and are seeing, it will continue to This will help commercial real estate as fall.” well, but we are seeing an unexpected delay as a result of the delta variant until ker with Douglas Elliman, “The luxury later in fall or early winter when people market has had the best market on record finally come back to the office.” Seasonality & Financing Miller explains that pricing for condo- miniums and co-ops is still below pre-CO- with a return to normal seasonal patterns. units sold. That’s a lot of hometown buy- Labor Day in all markets,” he says, and see more foreign buyers.” He adds that standards and underwriting are easily 20 ment will regulate prices. In all markets, percent from two years ago. Decline in we will see improvement. Lending stan- dards are tight, and there’s lots of stimulus money. When the economy recovers, and by a few months.” The Luxury Market A few years back, most agreed that the top end of the market was severely over- approved, financed, and scheduled for the change in tax laws and the uncertain- ties of the 2020 election. The arrival of about this is pre-COVID. Consider Man- hattan. If you added up all the active and shadow inventory in 2020, it would take almost nine years to sell out the units un- sold at that time. There was tremendous more sales activity, and also a more mod- According to Benjamin Dixon, a bro- this year. \[The year\] 2020 was a disaster. This year, though—2021—units priced at $4 million and above sold at over 20 per week. Twenty per week is consid- “Those buying in new developments,” ey. What we are seeing now is that new development listing inventory is down 4.4 REAL ESTATE TRENDS