With the COVID-19 pandemic in the United States daily life has changed for many people and businesses, especially those in New York City. The real estate market in New York is no exception.
What is this sector of the market like in our current situation? We invited Steve Kalifowitz, President of Localize.City, for a special Q&A session on what the NYC real estate industry is like right now during the Coronavirus pandemic.
A New Yorker born and raised, Steve has more than 15 years of real estate management and investment experience, with 20 years of working with the most highly visible platforms, brands, and content throughout the world.
Q: Is the real estate industry ready for a pandemic like the Coronavirus?
SK: Not really. That said, very few industries are. Property is often highly leveraged, so for many people making mortgage payments is going to be a problem & getting a new mortgage is going to be difficult.
Q: Is it similar to other historical events such as 9/11 or the financial crisis?
SK: Not since the Great Depression have we seen something on this scale.
Q: Were we in a good position as an industry getting into this crisis? Were we ready for that sharp of a decline in transactions?
SK: No, and neither was any other industry.
Q: Do you anticipate a “casualty” among the big brokerage firms amid the crisis?
SK: Anything is possible. Realogy’s stock has fallen through the floor & they have lots of debt. No one in real estate will come out from this unscathed.
Q: What do real estate companies/brokers do right now to prevent the spread of the virus? Can a broker work remotely?
SK: The immediate response has been to stop all open houses and in general not show homes. This is aligned with the broader need for people to not leave their homes unless it’s absolutely necessary.
Brokers can work somewhat remotely assuming they have created virtual tours of the properties they represent. But with the market frozen, the reality is that there won’t be much movement until the virus is under control.
Q: Can technology help agents and brokers right now? Which one and how? Websites? Virtual open houses? Is there a technology you would like to see?
SK: For people looking to move in a few months, the best use of time right now is doing research. Maybe look in areas you previously hadn’t considered because you didn’t have the time to consider it.
Now that we all have extra time on our hands, and should be staying at home, a great resource is Localize.City. Every property on the market can be researched. You can read reviews about buildings, learn about things you wouldn’t find out even if you visited (like if there’s a subway running under the building or how much sunlight an apartment gets throughout the year), and you can even learn about what the future holds: if new construction will start soon, if parks nearby will be renovated, and much more.
Q: How has the virus already affected the nyc real estate industry in your opinion?
SK: There has been a dramatic impact. Besides the fact that people shouldn’t be leaving their homes, there are other factors at play.
Even with interest rates being incredibly low, buyers are extremely worried about job security so committing to a mortgage right now is tough. Also, anyone with money in the stock market has lost a lot of their net worth recently.
On the other side, sellers might decide not to move and just refinance to reduce their monthly payments. For those who lost or may lose their job, NY State recently passed a moratorium on mortgage payments, so they have no incentive to sell right now.
In rentals, there is a moratorium on evictions, so many will stay put and go month to month until things settle down. And similar to buyers, many renters may be concerned about job security so signing a new 1 year lease is something they’ll want to avoid.
That said once things stabilize it’s likely the real estate market will come back strong, especially if interest rates remain at historic lows. Depending on how hard the economy is hit, NYC may see a decrease in demand thereby reducing the price on rentals.
Q: Do you think the low interest rate and fact that people are cashing out from the equity market will bring in more activity? In what areas of the industry (luxury/developments/etc.)?
SK: Yes, people will likely get scared of the stock market and look to invest in more stable assets like real estate, especially with lower interest rates. I’m not sure which parts of the industry will see the most activity. Probably distressed assets.
Q: What will cause the industry to recover and when do you think it will happen?
SK: Once people will be able to leave the house freely, we should expect the rental market to come back quickly. The sales market may come back fast too, if the economy stabilizes. But if this current situation remains until July as some have predicted, then I really don’t know.
Q: Is there any positive outcome to the industry from this crisis? Perhaps lessons we can learn, regulation that is needed, changing norms, etc.
SK: I think if people heed my advice earlier in the questions, regarding “research” then yes. The new norm should be that lots of deep knowledge is available at your fingertips, and it is! At Localize. So before people go out and buy or rent a new home, they will do their homework first and then spend time only visiting homes they know a lot about, and choose wisely.
Thank you Steve Kalifowitz for giving insight on how the real estate market is like right now and what changes we can hope to see once the Coronavirus pandemic is behind us.
Apartment and home hunting in NYC right now may not be the easiest (or the safest) thing to do in person, but can be a great opportunity to research and look through different neighborhoods while staying at home.
Just as Steve mentioned, for those looking to move in a few months, this is the time to do your own research! Luckily, Localize.City is here to help you narrow down your search with insights for all the apartments and homes available in the City right now.