Picking up on the market conversation and likely scenarios that we will see in the real estate market once the economy opens up…
I do not think that we will see the same thing in the same respect
as we saw during the financial crisis. Right now, I am seeing people that are
contacting me, investors who are contacting me, and asking about property that’s for sale. There are buyers who have purchased already from me and they are looking for property for friends. We are able to go out there and some of these people are out there actually already looking at property in the sense of virtually, so to speak.As a matter of fact, the other day, we even had an offer on a property.
Closings for properties that were already in the pipeline from before the pandemic are continuing. We have virtual closings. I had a property that we were in contract or setting up the closing. The attorney mailed the documents to the seller. He sat in his car, in the driveway of the seller’s house, and waited for them to sign it. Then retrieved it from the mailbox probably with gloves and mask and everything. Then they got those documents brought over to the buyer’s attorney. The buyer’s attorney or their assistant met in a separate room with the buyer. That’s how (one of the ways) the closings are happening these days.
What can we see or what can we reasonably expect going forward in the real estate market, as the economy starts to re-open in different phases? I think that just like everyone else, its going slowly start to happen that the market starts to open. Real estate is phase 2 of the re-opening of the economy. I think that over the next few months or year, the only people really that are gonna be selling property are people that really, really want to sell. I think that a lot of people will just decide to wait it out and not sell because the property values will be going down at least some percentage over the next few weeks, the next year or so. I can definitely see a buyer’s market assuming no second wave of the pandemic. Assuming the stock market doesn’t crash and break though thresholds the buyer market might be limited in duration to 12-24 months.
Definitely, opportunities will be there for people that have been sitting on the sidelines waiting with cash. I don’t think it’s going to be the same type of situation that we were dealing with at the time of the financial crisis. I think that we’ll see buyers be able to take advantage of some depreciation.
However, the X factor that could really fuel depreciation is fear and a destructive 2nd wave. If sellers flee the city, liquidating their properties because of the lack of restaurants, and fear of getting sick, this can hit harder than the financial crisis. Working against this force is very low interest rates and condos can be rented out so do not have to be sold. Co-ops normally choose people that are even more financially secure and these parties may be insulated more to an economic downturn.
Being that I am a real estate broker for the last 21 years working mostly in Manhattan and all over pretty much New York City, I am in unique position to comment on what we can expect potentially coming up as the economy opens up.
I have been through many ups and downs throughout the real estate market including 2001,the financial crisis, and now of course we are all going through this. I thought it would be interesting to give you some observations from my perspective, of someone that’s dealing with this on a day to day basis. For the last 16 years, I have handled foreclosed properties for banks. Just prior to the financial crisis hit, I was evaluating a lot of properties for them. I saw the evaluations I was doing ramp up and then all of a sudden, the financial crisis hit and we got a lot of foreclosures in the market. So, I found myself, as well, selling a lot of those properties.
When the pandemic was really hitting its height in early April, Real estate, a lot of people may not realize, was declared essential services. We were only allowed to work from home though and do virtual showings. So pretty much the same thing that a lot of other people are doing – working from home and doing our job as best as we can from there.
I am allowed to, as of now virtually show property. I can go there if it’s an empty property and I can do a face time with a potential buyer or client. We can do virtual tours or videos and of course through zoom meeting. Like many other people, we’re not allowed to do a face to face. We’re not sitting down and meeting with clients in person and we are not going physically to a property with a client.
What’s interesting about that is that the real estate industry usually lags behind most advanced technology but all of a sudden, we have virtual tours on practically all properties. All of a sudden, we have videos on most properties. You have that available now so a lot of positive innovations have come out of it.
Once the financial crisis hit, we found ourselves with a lot of foreclosures. The market did take a step back and we saw longer times on the market if we talk about prime neighborhoods in Manhattan. We saw depreciation.
To be continued in next Part 2 (next blog post)
I think when you are choosing a broker to sell your Manhattan apartment, it comes to 5 questions that you need to answered.
1- How long have you been working in real estate?
2- Do you work by yourself or in a team?
3- What experience have you had in my building or nabe?
4- What is your marketing plan to sell my apartment?
5- How did you arrive at your proposed listing price?