COVID-19’s Impact on the Residential Market in New York City
It comes as no surprise that once COVID-19 made its way to the United States, New Yorkers fled the City when faced with the realization that they would be forced to spend each day in their 500 square foot apartment with no end date in sight. As the months have passed, several families have moved to the suburbs in search of more space with remote work, school, and at-home entertainment becoming a very real reality. Many single New Yorkers have also opted to leave as they can now choose to work remotely from anywhere. Due to the pandemic, the vacancy rate in Manhattan has now grown from its usual 2-3% to 6% as of October this fall.
So what do these changes mean? It is a buyers and renters market to be sure. Not only are people taking advantage of the 5-10% price drop on properties, but more and more renters are also seizing the opportunity to get a bigger and better space for their budget. While the pandemic has crushed industries such as gyms, restaurants, and movie theaters; there are a lot of businesses that can fully operate remotely and they are the select few who have seen a business boom. Those who are fortunate enough to be in a stable financial position, are making their way to New York, one of the most resilient cities in the world, and acquiring major bargains in the process.
The pandemic has not only affected the buying market but even the rental. As of October 2020, there were over 16,000 unrented units in Manhattan. In a drastic switch, renters now have the upper hand over their landlords. Rental properties are now priced about 12-19% lower than the same time last year. A recent study conducted by Douglas Elliman and Miller Samuel shows that new lease agreements rose 33% in October 2020, which is the highest it has been in roughly twelve years. This recent uptick in lease agreements is unusual for the time of year, but given the amount of inventory and vacant apartments, renters are now being enticed with one-two months of free rent and lower monthly payments to fill these properties.
While markets fluctuate based on the current climate, there are certain truths that will always remain. That is: “location, location, location.” In spite of all the major catastrophic events New Yorkers have faced throughout history–9/11, the market crash, the Great Depression–the city still draws in hundreds of thousands of people each year who are in awe of what the city has to offer. For those interested in investing in residential properties in the City, 2021 is a great opportunity to dive in while the market is hot and have your pick of listings. Not only is there an abundance of units, but they vary in size from studios to two bedrooms, or more. Renters can now take advantage of the discounts and negotiate great terms for their new leases. As all experts can agree, New York will continue to be one of the largest real estate markets in the U.S. as we enter into the new normal.
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