Author Topic: How will COVID-19 Affect the Real Estate Market?  (Read 6253 times)

Offline Matt

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How will COVID-19 Affect the Real Estate Market?
« on: March 23, 2020, 11:56:55 PM »
There's a lot of speculation about how the real estate market will be impacted by COVID-19. Personally, I think it will be impacted, but it will take some time for that to be clear. Real estate is slower to react than the stock market.

I think this has potential to drastically change both the housing market and the commercial market. So many of our small businesses will be hurting soon, if they are not already.

Here's a recent article on this topic:

https://ny.curbed.com/2020/3/10/21173411/coronavirus-new-york-real-estate-home-prices-covid-19

What do you think? How will it impact Jackson Heights?


Offline r

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Re: How will COVID-19 Affect the Real Estate Market?
« Reply #1 on: March 24, 2020, 01:03:28 AM »
It will hurt condo buildings, especially buildings where apartments were bought in order to rent out on Airbnb etc. Those apartment owners will have no cashflow now and may not be able to pay their mortgages or maintenance.

I think it will hurt co-ops less. And since Jackson Heights is mostly co-ops and houses, it might not be so bad here...

Offline abcdefghijk

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Re: How will COVID-19 Affect the Real Estate Market?
« Reply #2 on: March 24, 2020, 07:50:24 AM »
My prediction.

Prices will decrease.

Folks will have lost jobs. The economy will have to recover.  People will leave New York.

2-3 years of a significant downturn.

Offline JH3525

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Re: How will COVID-19 Affect the Real Estate Market?
« Reply #3 on: March 24, 2020, 12:59:32 PM »
I completely agree with Matt that the Real Estate is slower to react then the stock market.  We won't know what impact the financial markets will have on the real estate market until the 4th quarter.  At this time its speculation and guessing.   

Offline abcdefghijk

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Re: How will COVID-19 Affect the Real Estate Market?
« Reply #4 on: March 24, 2020, 01:28:21 PM »
Yes, of course it is speculation at this stage.

But one fact is: the prices for a typical Manhattan house increased 62% in a run up of the 1929 stock market crash and then lost 51% of that value by the end of 1933.




Offline hum@njukebox1

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Re: How will COVID-19 Affect the Real Estate Market?
« Reply #5 on: March 24, 2020, 11:20:48 PM »
I can't imagine there will be much buying and selling going on for quite some time.  Gotta believe prices will fall.  Wash your hands.  Stay inside.  Be safe. 

Offline abcdefghijk

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Re: How will COVID-19 Affect the Real Estate Market?
« Reply #6 on: March 27, 2020, 09:01:48 AM »
I read an article about the Corona Virus Emergency Package...now being debated in Congress... that says there's a provision for real estate developers to use depreciation of property to offset tax on other income. (Their stock market income, for instance).

So they are planning for a decrease in property values.

However, my prediction is that everything will contract. Stock market, real estate you-name-it.

Like I said before...maybe for 2-3 years until we recover from the current crisis.

Stay safe... take care...and gratitude for the health workers on the front line...

And afterwards...there'll be challenging times ahead...but we're New Yorkers and we'll overcome them.








Offline agentarmen

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Re: How will COVID-19 Affect the Real Estate Market?
« Reply #7 on: March 28, 2020, 04:42:20 PM »
Matt:

I am glad you framed your question specifically for Jackson Heights. Since New York real estate market is a constellation of mico-sectors, Jackson Heights is on of them.

It would be pure speculation to speak on HOW it may be affected, but I it will be factual to state WHAT will affect it. While COVID fog keeps us all home, real estate industry and apartment sales are at a standstill. All activity, with exception of remote servicing aspect of deals already in progress are at full stop.

Now on Jackson Heights:
Question is WHAT will affect Jackson Heights market after the COVID fog clears and we can resume life as usual.

Since nearly 90% of all Jackson Heights owned residential inventory is comprised of primary coop residences, we will need to see a mass selloff of personal homes. In order for prices to begin to drop we will need to see an unusually high spike in available inventory for a period of Four plus (4+) months and a trend of increase in inventory while these properties sit on the market.

Important to remember, that qualification for most of Jackson Heights coops has been carefully buffered for owners to be able to withstand temporary job loss and debt to income ratios are kept low enough not to exceed comfortable housing payment levels. Some level of acceptable reserves are also accounted for and loan to value requirements assure positive equity in any market fluctuation (yes coop owners have more skin in the game). Effectively, Jackson Heights property ownership has been built to withstand shock to the economy.

There may be potential sellers right now, who were about to go to market and did not, potential sellers who are now in the process of deciding to sell, because they need more space or had life changing event. They will inevitably be the first wave of properties to come to market. Beyond that, we can only be predicting a panic sell-off.

I, personally, do NOT predict a panic sell-off in Jackson Heights! Once COVID passes, and have no doubt it will, we will see improvement in the economy and any panic selling thoughts anyone may have right now, will be a thing of a past. 

As COVID goes on, I am working on two closings, which are still on track and send out a contract, which was negotiated before we received a mandate to stay home. Work will still get done.

I wish everyone strength, perseverance and I look forward to seeing you on the other side of this! I also hope the next post I write, will validate my personal opinion, which I base on my personal knowledge of folks who have made Jackson Heights home, how much they love and value it.

Warmly,
Armen
Armen Meschian
Licensed Associate Real Estate Broker

CORE
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New York, NY 10065
t:     212-612-9694
c:     917-848-6928
f:     212-612-9650
am@corenyc.com

http://www.JacksonHeightsListings.com

Offline abcdefghijk

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Re: How will COVID-19 Affect the Real Estate Market?
« Reply #8 on: March 28, 2020, 06:28:57 PM »
Matt:

I am glad you framed your question specifically for Jackson Heights. Since New York real estate market is a constellation of mico-sectors, Jackson Heights is one of them.


Warmly,
Armen

Jackson Heights competes with Brooklyn and Manhattan for buyers. We are part of NYC. Pretending that we're not is disingenuous.

Once the rest of NYC goes down, so do we. We're not isolated.

After all, when prices in the rest of NYC went up, Jackson Heights increased too, on the heels of those upwards prices.

It's only logical that we go down when NYC goes down. The reverse situation.

But again...it will only be temporary in my opinion. 2-3 years.

Offline agentarmen

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Re: How will COVID-19 Affect the Real Estate Market?
« Reply #9 on: March 28, 2020, 06:56:44 PM »
abcdefghijk. I follow your reasoning.

I want to clarify. What I meant was that each sector of NY market behaves differently and reacts differently to market change. For most part NYC market has not been doing well, 2017, 2018, 2019 have been down years and it had been considered "buyers market" (2020 too early to call), yet pricing curve in Jackson Heights AND a list of other markets such as many areas of Brooklyn and certain pricing sector in Manhattan had been slowly, yet steadily up.

If inventory increases and stays, in ANY one sector of NYC, that sector will see price drops. If available inventory in a market area gets scooped up, they will see an increase. Guess the point I am not in agreement with, is that NY is one big market that all sectors move up and down together.

Hope this is helpful.
Armen Meschian
Licensed Associate Real Estate Broker

CORE
673 Madison Avenue
New York, NY 10065
t:     212-612-9694
c:     917-848-6928
f:     212-612-9650
am@corenyc.com

http://www.JacksonHeightsListings.com

Offline abcdefghijk

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Re: How will COVID-19 Affect the Real Estate Market?
« Reply #10 on: March 28, 2020, 09:32:46 PM »
I understand the nuances you are talking about. And in normal times, of course, you are correct.

But the situation at the moment is far beyond nuance. And these ain't normal times by any stretch of the imagination...


Offline r

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Re: How will COVID-19 Affect the Real Estate Market?
« Reply #11 on: March 28, 2020, 10:10:58 PM »
AFAIK people either don't move during recessions, or they move to larger cities where there are more jobs. So NYC should be fine.

Except in this case people might want to avoid NYC, if they get scared of living in dense, public transport oriented cities where viruses like this one can spread so easily...

Nobody knows yet. Maybe NYC will actually have the best response of any city and people will want to move here. Cuomo seems to be doing a good job so far.

Offline abcdefghijk

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Re: How will COVID-19 Affect the Real Estate Market?
« Reply #12 on: March 29, 2020, 08:56:23 AM »
Though it may feel good to pretend about Jackson Heights' "exceptionalism", I have never read of an instance in history where a recession or depression didn't decrease property values.

Temporarily.

Until the recession/depression was over.


Offline Matt

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Re: How will COVID-19 Affect the Real Estate Market?
« Reply #13 on: March 29, 2020, 12:51:20 PM »
I agree that Jackson Heights is not in a bubble, however I also agree that the affect will be different from neighborhood to neighborhood.

I'm really worried about all of our small businesses. So far the government's response has been slow and it hasn't been big enough. I worry that many will not be able to reopen or if they can, they will be too far into debt to stay open for very long.

If we have many empty storefronts along 37th, Roosevelt, Northern, 74th/73rd, 82nd street, etc. - it will definitely make JH a less desirable place to live. This problem won't be limited to JH, of course.

I've been wanting to move to a larger space in JH for some time now. I've felt the prices had gone up too much, too fast which has prevented me from moving forward. Once the dust settles, it will be interesting to see how this changes the local housing market. It's definitely a possibility that I won't want to stay here (although an unlikely one!).

Offline abcdefghijk

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Re: How will COVID-19 Affect the Real Estate Market?
« Reply #14 on: March 29, 2020, 02:30:11 PM »
The unfortunate things I am reading, is that they're saying only chain stores might survive this leap off the cliff due the pandemic.

Because chain stores might have some cushion of money. (Might!)

Small mom and pop businesses certainly don't much have cash. They usually run on an overdraft.

Yes, Matt. Folks in your situation might definitely reconsider. However, there won't be a neighborhood in NYC that's unaffected.

All of NYC will be in the same boat. Except perhaps places with mostly chain stores.

Where's that? Er...Times Square?

The streetscape of NYC...(including Jackson Heights) and elsewhere even outside NYC...will surely never be the same...






Jackson Heights Life

Re: How will COVID-19 Affect the Real Estate Market?
« Reply #14 on: March 29, 2020, 02:30:11 PM »