This year, the total number of residential transactions and residential sales volume decreased considerably, by about 50% year over year. This means that the sales volume dropped from 12.8 billion USD to about 6.4 billion USD by June of this year. This has been one of the lowest figures since 2011. Apart from Staten Island, there was a steep decline in total sales across all boroughs in New York City.
Across the city, the number of residential real estate transactions dropped by 43% year over year in all five boroughs. This meant a drop from 11,413 sales to only 6534 sales this year. Moreover, there was a 13% decrease year over year in the average sales price of a residential property in New York City, to about 975,800 USD in the second quarter of this year.
The real estate industry of New York City is one of the main factors contributing to the city’s economy, with 53% of the total annual tax revenue generated from this industry alone. Hence, declining sales and transactions are bound to have an adverse financial impact which the city may not be able to overcome in the foreseeable future, especially amidst the current COVID-19 pandemic.
The housing markets in affluent areas such as Manhattan have been badly affected, with a significant increase in vacancy rates and decline in rents as residents move to second homes in the suburbs. The Upper East Side has been described to be a ghost town during the pandemic, with an increase in rental moving trucks making the situation seem bleaker.
However, many real estate professionals have stated that the real estate market in New York City will soon return to what we know it to be. Although areas such as Manhattan are seeing high vacancies, other regions such as Staten Island, Queens, and Brooklyn have only seen a surge in rental rates. People living in these areas are not likely to move due to lower income, employment, family etc.
One explanation for the grave impact on New York City’s residential real estate market is that while other markets opened much sooner, New York City was slower to reopen. Hence, there was lower sales and transactional activity in comparison to other cities across the United States. People living in Manhattan have also started moving to Brooklyn which has made the housing market there much stronger.
Although wealthier families have moved to areas like the Hamptons, many are just relocating within New York City. Many residents have taken advantage of the drops in sales price and have bought better properties which they plan to sell once the situation returns to normal. Therefore, it can be said that although the market has definitely changed temporarily, it is highly unlikely that this change will become permanent.