The COVID-19 pandemic has had an adverse effect on almost every sector and aspect of society, making 2020 one of the toughest economic years in history. While most industries have experienced a financial blow, the real estate sector has seen fluctuations in trends since the virus outbreak in the country. Recently, New York entered the fourth phase of reopening and a shift was observed.
In June, resale home sales remained low. A month later, these sales increase significantly, and July was marked as one of the strongest sales months since March. Across the four boroughs in New York City, over 2300 real estate deals were closed, which was about a 40% increase since June. However, sales still remained 33% lower than the numbers from July 2019.
Housing prices remained steady throughout the coronavirus pandemic. However, in June, the median sales price reached 718,000 USD which was the highest number seen in the New York City real estate market to date. On the other hand, the median sales price in July decreased by 13% year over year. This price, at 680,000 USD, was also the lowest median sales price since March this year.
Statewide, the median price in New York reached 300,000 USD which was much higher than the price last year. This increase was due to a lack of home listings as people decided not to sell because of uncertainty during the pandemic. The monthly home supply in the state decreased by almost 16% year over year.
While the national value of foreclosures is 1.2 homes per 10,000, data on New York City has revealed that only 0.1 homes are foreclosed per 10,000 homes. The city also sees 1.8% delinquent mortgages, which is a higher number than the national value of 1.1%. In July, the number of homes that were foreclosed was 200% higher than the number in June. However, this value still remained 90% lower than the same time in 2019.
Currently, there are over 700 properties in New York City which are foreclosed. The stage of foreclosure that these properties are in varies from default, action, or bank-owned. The number of homes available for sale in New York are almost 3000, with about 4000 houses recently sold in the city.
Out of all four boroughs, the real estate market in Manhattan was impacted the most as both sales as well as prices of houses were adversely affected. In Queens, the year over year median sales price increased the most while the sales activity in Brooklyn was the lowest. The Bronx also saw an increase in median sales price, with an 8% year over year rise. While sales strengthened across the city as shelter-in-place regulations were eased, they still remain 42% lower than they were in June last year.
Another factor affecting the residential real estate market is the high unemployment rates due to COVID-19. According to data collected by the Bureau of Labor Statistics, the unemployment rate in New York City increased to over 20% in May while the unemployment rate outside of New York City was about 13%. When people do not have jobs, they are unable to pay rent.
Consequently, people cannot afford to live in the city and many New Yorkers have started to move after their leases expire in the summer. As a result, the real estate market has become saturated with vacant rental homes. In July alone, Manhattan saw a 65% increase in rental inventory in comparison to the same time last year. As of July, rental prices in Manhattan have dropped by over 3%, which is one of the largest year over year decrease since the Great Recession.
As the demand for rental houses continues to decrease, it can be expected that rents will also be reduced considerably, making it a buyer’s market. Nonetheless, the rental market in New York City is still strong as the factors that cause high rental rates are still present.