There are contradictory reports in the media at the moment, with some speculating price dips of up to 30% (depending on segment) and others suggesting a very strong recovery for the market once things normalize a bit. Since real estate reporting is delayed, and we don't know what apartments currently in contract will close for, we'll have a clearer picture of pricing during the summer months.
What we do know is that the market is not as "paused" as most think it is. Buyers are still buying, but they are looking for good deals. However, market activity varies building to building, as it really is dependent on building restrictions and the ability to access for photos, virtual tours and socially-distanced showings.
Resale Market Last week, seven weeks into the shutdown, only 31 contracts were signed in Manhattan, down 87% from the same week in 2019. This was the lowest number since the shutdown order. Initially during the shutdown, the number of newly listed homes plunged, as sellers waited to list their homes, but in the final week of April they began to rise for the first time during the pandemic. This continued last week with a 17% increase to 96 new listings, up from 82 the week before. The year-over-year comparison is still incredibly low. During the same period in 2019, there were 442 new listings.
Rental Market The number of New Yorkers signing new leases plummeted in April by a whopping 71% in Manhattan, 67% in Brooklyn and 65% in Queens from a year ago. The low number of new leases assumes high renewal activity. The low supply of available units also pushed the average prices higher because open units tended to be in more expensive buildings. Lower-end units were less likely to hit the market than usual, presumably because landlords and tenants did not want to cope with filling and finding new apartments during the pandemic. Meanwhile, rental markets surged in summer home territories like The Hamptons and Jersey Shore.
Return of SALT In the new proposed stimulus bill is a measure that could reinstate the so-called SALT itemized deduction for 2020 and 2021. The 2018 Tax Bill limited the amount of state and local tax deductions filers could claim on their tax returns to $10,000. This write-off includes state and local income taxes, so it hit taxpayers in high-tax states the hardest. New Yorkers who itemized deductions in 2017 and claimed a SALT write-off took an average deduction of $23,804 (Tax Policy Center). SALT is the only cost-of-living element to the tax system and the states most impacted by the SALT cut are donor states that provide more in Federal tax dollars than the Federal government spends on those states, fueling higher state and local taxes.
Mortgage Relief Congress' stimulus package gave US homeowners with a mortgage backed by the government the right to pause their monthly payments if they experience hardship. Through early May, the Mortgage Bankers Association estimates that almost 4 million U.S. borrowers (nearly 8% of residential mortgages in a weekly survey) are in forbearance, meaning that they still owe the payments eventually but can skip them for now without penalty.