New York real estate agent Weimin Tan explains when Manhattan will recover

Posted by Wei Min Tan on November 14, 2020

the Manhattan, New York the sell market has steadily rallied from the lows in April and May when we had the Covid-related containment. As a broker, I have experienced bidding wars in the $3 million and above, three bedroom price segment. Well-priced apartments are attracting a lot of interest from buyers who are all ready to take advantage of historically low mortgage rates.

Separately, rental prices in Manhattan fell 19% as tenants failed to renew leases under companies’ work-from-home policies.

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Find out what Wei Min is up to Role of a buyer’s broker.

Manhattan Sales Data from UrbanDigs

According to the data analysis firm UrbanDigs‘ November 6 market update, active supply was 9,323, up 23% from a year earlier. It appears to be stabilizing since rising every week since April and May lows. There were 2,399 sign-ups under contract as of November 6, an increase of 29% from the previous month. 208 contracts were signed, still over 200, which is good considering we are entering the slow holiday season.

A very interesting graph shared by UrbanDigs is that supply at the price below $1 million is at 2012 levels where demand (trading volume) was much higher than current demand. Meanwhile, demand is currently at the level of the Great Financial Crisis of 2009. This means the market is favoring buyers. However, we do not expect this to last as the supply decreases and the demand increases.

Weimin’s article, Invest in a penthouse in Manhattan

Transaction example: Represented several buyers at FiDi’s 130 William Street. which has performed well during the pandemic.

National trend

Nationwide supply was tight heading into the pandemic, and this has only been intensified by the pandemic-induced decrease in supply, as sellers have delayed listing their property for fear of strangers entering their homes. Now that the market has reopened, the whole country is experiencing a very hot real estate market, driven by weak supply and strong demand fueled by historically low mortgage rates.

According to a The Freddie Mac InvestigationMonday’s announcement by Pfizer that its coronavirus vaccine is more than 90% successful in trials sent stocks soaring and bonds sold. This pushed mortgage rates higher and reversed all of the rate cuts of the previous week. Nevertheless, rates are still very low and are stimulating purchase and refinancing operations.

What lower rates translate to nationally

Daryl Fairweather, Chief Economist at Redfin said that despite all the economic uncertainty related to the coronavirus, potential buyers now have an additional reason to buy a home – low interest rates. Meanwhile, existing owners can now refinance and free up extra money for expenses.

According to Freddie Mac, mortgage rates fell from 3.69% in October 2019 to 2.83% in October 2020. Nationally, the monthly payment for a $400,000 home with 80% financing has risen from $1,471 a year ago to $1,320 in October 2020.

At the Manhattan level where real estate prices are much higher, on a $1 million condo with an 80% loan, the monthly payment was $3,300 in October 2020 compared to $3,678 a year ago. year. Although most of the economic effects of COVID-19 have been negative, the low rates are good news.

Transaction example: Clients investment apartment in West Village which was purchased during the Covid lockdown. It now provides good rental cash to the owner.

Rentals in Manhattan

In Manhattan, the historical rental vacancy rate is around 1%. The most recent October 2020 data from Miller Samuel shows vacancies at 4.11%. This is four times the historical average. Why so high? The reason for this is that when leases expired, many tenants did not renew their leases. Companies have work-from-home policies, allowing employees to work from anywhere. To save on Manhattan’s high rents and take a break from New York, many tenants temporarily moved out of Manhattan.

But the tide is changing. According to CNBC, new leases in Manhattan soared 33% as tenants return to the city. This surge is the first in more than a year. Meanwhile, rental prices have fallen by 19 percent with owners offering an average of two months of free rent. Lower prices are attracting young tenants to the city.

In my 21 years of living in Manhattan, there has never been a better time to rent in New York.

Normalcy will happen when working from home ends

Despite the resumption of signed rental contracts, the rental market has still not returned to normal. When companies require employees to be back at work, that’s when normality will arrive. Employees are tired of working from home while corporate bosses see a drop in productivity. Many large companies are slowly getting their employees back to work, albeit fractions at a time.

From an employee’s perspective, it’s hard to concentrate while the whole family is working or going to school at home. Humans are social creatures. As a basic need, we need to communicate and be with others. By watching zoom video conferences, our basic need for socialization cannot be satisfied.

I expect rental prices to pick up next year, depending on when companies call employees back to work. In the meantime, landlords could renovate their vacant apartments to offer a better product leading to higher rents when the market recovers.

Weimin’s article, Is it a good time to invest in residential real estate in Manhattan, New York?

What we do

We focus on of global investors buy condos in Manhattan for portfolio diversification and long-term return on investment.
1) Identify the right purchase according to the objectives
2) Manage the buying process
3) Rent the property
4) Manage tenants
5) Market the property during the eventual sale

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