As showings resumed in July, we witnessed a flood of buyers re-enter the market. This resulted in a significant amount of inquiries and showings, but didn’t translate into the number of offers we were expecting. While demand was high, there was also a build up of supply sitting on the market. Come the end of July/early August, we finally saw offers being accepted and contracts being signed. It seemed as if buyers had to view everything on the market before pulling the trigger.
Overall, the post-COVID lockdown has been slow on the high-end but busy in the sub-$2M market. This has been fueled by super-low interest rates, first time home buyers that have been waiting for prices to drop, and investors looking for a deal. We expect for this to trickle up into the higher end of the market post-Labor Day with the return of wealthier buyers as schools re-open or even later as a vaccine/effective treatment emerges.
Manhattan Had a Cold July Across all price brackets, condo and co-op contracts were down 56% in July compared to last year. Two of the segments hit hardest were co-ops priced between $4 million and $5 million, which were down 94% from the same month last year, and condos above $20 million, a sector which saw no contracts signed. As New Yorkers looked for more space, the numbers in Brooklyn surged: 178 new condo contracts were signed in July, up from 147 last year and deals for single-family homes more than doubled.
Rental Market Generally throughout the summer, many leases turn over and rents tend to be higher because of demand. But the pandemic has put a roadblock in this seasonal pattern, with lots of turnover but fewer takers. Rental inventory in Manhattan is up a whopping 65% in July compared to the previous year which has led to an 11% drop in asking rents, not to mention concessions such as, no broker fees, free months and pushed back move-in dates
Where Are The Foreign Investors? Foreign purchases of U.S. homes dropped to the lowest level since 2013, a boost for domestic buyers at a time when inventory has been tight. Foreigners bought $74 billion in U.S. residential real estate from April 19’ - March 20’, down 5% from the prior year and the third straight year of declines. With COVID lockdowns and quarantining of foreign visitors, we expect this number to drop even further and anticipate pent-up demand to grow from this sector.
COVID Shrinks NYCs Wealth The combined wealth of New York City residents shrank by an estimated $336 billion, or 13%, in the past year, exacerbated by the fallout from the coronavirus crisis in 2020. The decline — measured as of June 30 compared with the previous year — is the largest drop in terms of dollars among major U.S. cities during that period, according to a report released Wednesday by research firms Webster Pacific and New World Wealth.
Mortgage Rates The average contract interest rate for a 30-year fixed-rate mortgage with conforming loan balances ($510,400 or less) decreased to 3.06% from 3.14%, with points decreasing to 0.33 from 0.39 (including the origination fee) for loans with a 20% down payment. Mortgage applications to purchase a home rose 2% for the week and were 22% higher than the same week in 2019. Mortgage rates reached an all-time low in July, causing a spike in mortgage applications.