The "Covid Discount" Disappears
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Last month we couldn't believe the pace of contracts being signed. Well, it has accelerated and market activity continues to rage. Likely driven by pent-up demand and continued record low interest rates, we are seeing deal volume that is 26% higher than previous peak levels we saw in boom years, in the summers of both 2013 and 2015. There are currently 4,800 pending deals, with just over 1,600 contracts signed in the last month alone. We are also seeing record inventory numbers; over 2,200 listings have come on the market in the last month. That is 42% higher than the seasonal average pace of the past nine years* which includes 400 or more new listings per week for 8-9 weeks running. So as you can see, the faucets are on and the marketplace is flowing in a very healthy manner.
The result of this extraordinary activity has been a disappearance of “the covid discount.” When the pandemic hit and it felt like Armageddon, uncertainty and the resulting sentiment about Manhattan’s viability were grim. People expected fire sales and 50% discounts; those never materialized. We saw 8-25% discounts at the most, with a more moderate average discount being in the 10% range. But New York never stopped breathing, instead it rested, contemplated and has come raging back like never before. Like Oscar Goldman said about Steve Austin in the old Six Million Dollar Man introduction, he [Manhattan in this case] was “barely alive.” But that is not the end of the story; New Yorkers have since infused their spirit and resolve into this city. We are creating a new Manhattan, as Goldman continued, “better, stronger…faster.” And those covid discounts have virtually disappeared, as we are seeing discounts far closer to the 2% range on average, with a growing number of properties experiencing bidding wars and above-asking-price deals.
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The question, however, that everyone is asking is, “how much longer can this pace be sustained?” The answer lies in the basic supply and demand principle. Will supply outpace demand, meaning that escalating prices will moderate? Or will demand continue to increase and continue that upward pressure on pricing? The debate is out there. Most industry colleagues feel that demand may not moderate until late summer, as many people will, by then, know what the Fall holds for them. They will either be situated housing-wise, or at the very least be in the process of finalizing those plans. Beyond Fall, the feeling is that demand will remain robust, but less frenzied. Whereas we have seen deal volume outpace supply, you don’t even need that 1:1 ratio of supply and demand to see an escalation in pricing. Demand merely needs to be substantial.
Several factors to consider which will have varying effects on how the above plays out: Will interest rates remain low? A rise in rates could put a damper on demand, as it affects purchasing power; meaning sellers may not experience the steep price appreciation they desire. Continued normalcy will bring a regular flow of people back to the city...including foreign buyers, which have been nowhere to be seen in over a year. I have not yet personally seen it with my foreign clients, but I am hearing more and more anecdotal stories from my colleagues about their foreign buyers entering the fray. I expect to see the gates open on this front and that will boost demand. Taxes? SALT repeal? The Mayor’s race? All factors to be monitored.
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Although the market activity has drastically increased, sellers need to price right-on-the-money, as the chart above depicts how time on the market erodes value.
Interestingly for buyers, see the dip in rates that just occurred (see Mortgages & Interest Rates” below)…down to 2.75% on a Jumbo 30 year fixed...opportunity abounds.
* Source UrbanDigs
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“With the country continuing to reopen, New Yorkers returning to the city, and the vaccine rollout progressing rapidly, buyers are recognizing that now is the time to buy.”
– Gary Barnett, Founder and Chairman of Extell Development Company
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Please join me on Thursday’s at 4pm EST as I co-host a weekly zoom program called “Boroughs & Burbs” with my colleague John Engel. We talk about innumerable real estate issues and topics in New York and its suburbs which include CT, The Hamptons, NJ…we’ve recently even tapped into to see what’s been going on in Palm Beach, Miami and L.A.
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The Del Monte - 102 West 75th Street #31
What Upper West Side Living is all about...
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With gorgeous tree-level views along West 75th Street, this home captures the essence of Upper West Side living. This three (3) bedrooms and two (2) and a half (1/2) bathroom home features high ceilings, hardwood floors and an entry foyer. From the moment you enter, you are seduced by the grand proportion and warm details of its Prewar era. The glorious open living room, dining room and kitchen stretches 44' feet, from north to south. The enormous, open eat-in-kitchen allows for enjoyable entertaining. It is adjoined by the dining area which can seat from 10-14 people. Directly off the living space is a comfortable library and/or third bedroom. In the separate and private East wing of the apartment you find the primary and second bedrooms and a home office. It has 12 windows, 9 closets, a wine bar and a clothes washer. Note: please see the alternative floorplan in the event your preferences require the third bedroom and/or additional home office. For more click here. To watch the PROPERTY VIDEO click here.
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These are great local resources, especially at times like these. Here are some of the best and most comprehensive neighborhood blogs that are helping to keep us informed. Click on each.
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With Patch you can choose New York City; however, they also have more concentrated areas categorized as follows: Central Park, Upper West Side, Upper East Side, Midtown-Hell's Kitchen, Harlem, Astoria-Long Island City, Chelsea, Gramercy-Murray Hill, West Village and East Village.
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* MORTGAGE & INTEREST RATES *
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Rates are at near historic lows
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Courtesy: Wells Fargo as of 5/4/2021 @ 1:51pm EST
Example of Purchasing Power
Interest Rates:
Example below reflects today's 30 year fixed rate of 2.750% vs. 4.625%, just couple years ago.
$1M borrowed at 2.750% = $4,082/month
$1M borrowed at 4.625% = $5,141/month
That is a difference of $1,059/month or $12,708/year.
Alternatively, we could look at it this way:
At 2.750%, $4,082/month will afford you a $1M mortgage.
At 4.625%, $4,082/month only afforded you a $794,000 mortgage.
That is 20% more purchasing power than 2.5 years ago, just because of interest rates.
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* Most Recent MARKET REPORTS *
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The Latest Market Reports - Sales:
Hamptons' & North Fork 1st Quarter (2021): click here
Interactive Rent vs. Buy Calculator:
Other Markets:
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One of my favorites....
Alice Neel: People Come First is the first museum retrospective in New York of American artist Alice Neel (1900–1984) in twenty years. This ambitious survey positions Neel as one of the century’s most radical painters, a champion of social justice whose longstanding commitment to humanist principles inspired her life as well as her art, as demonstrated in the approximately one hundred paintings, drawings, and watercolors that will appear in The Met’s survey.
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By Eater Staff - Photo: Gochujang fried chicken from Chick Chick | Alex Staniloff/Eater
Just over a year since the pandemic hit the city, many restaurants are juggling cold-weather outdoor dining efforts alongside limited-capacity indoor dining. As New York City works to contain the spread of COVID-19, many more restaurateurs are feeling emboldened to move forward with openings.
Dozens of new restaurants have opened in recent months, a remarkable change from earlier during the pandemic when many businesses pushed back their launches indefinitely. As New York City settles into this current reality, Eater is highlighting new restaurants in Manhattan — and a few old favorites — offering a mix of outdoor seating, indoor dining, delivery, and takeout, that have opened in the last few months.
New to the list in May: Ssäm Bar (the restaurant reopened at the South Street Seaport under the purview of celebrated Kāwi chef Eunjo Park), Chick Chick (a new Korean fried chicken spot on the Upper West Side), and Iris (chef John Fraser’s Mediterranean debut in Midtown).
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ALL YOU CAN EAT Podcast
w/ "THE" DANNY MEYER
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Episode 105 of Rob's ALL YOU CAN EAT podcast was a wide ranging discussion with Danny Meyer, legendary restaurateur AND now Chairman of New York City Economic Development Corporation Board of Directors.
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The Food Humorist©, is a Manhattan born man-about- town who writes, produces and hosts programs about food. I highly recommend his new book for Dads like myself. There is a new kind of dad, and he's doing far more domestic duty than at any time in history, including cooking. Although it's written with a sense of humor, this book is a serious resource for dads and anyone else interested in upping their game to make great tasting foo d bat home, even if they have never used a chef's knife or a roasting pan before.
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PRIVATE ONLINE COOKING CLASSES:
Ask Rob about his privates…by which he means that he offers customized cooking lessons to individuals and to groups. You learn, you laugh, and you eat well.
Now that ALL of us need to pitch in when it comes to feeding the family, I suggest picking up some serious tips from Rob. As he says, he went to cooking school so you don't have to. These sessions are fun and literally provide prized skills for upping your game. Enjoy. See Rob's intro here.
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* G R A F F I T I - Cooking @ Home *
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Prepare Your Property for Market with BHS's new program
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Curate provides you with the ability to prepare your home for sale
with no up-front costs,100% payable at closing.
Services include Cleaning/Decluttering, Renovation, Staging & Design
and more. Contact me and/or click here to learn more.
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New York City * The Hamptons * Palm Beach
Connecticut * Miami
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With Partnering Worldwide, Brown Harris Stevens continues to leverage its very productive relationships with top brokerages nationally and internationally by inviting partners to high- light key properties in their respective markets on BrownHarrisStevens.com, and to feature our important properties on their sites. Learn more.
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With Partnering Worldwide, Brown Harris Stevens continues to leverage its very productive relationships with top brokerages nationally and internationally by inviting partners to high- light key properties in their respective markets on BrownHarrisStevens.com, and to feature our important properties on their sites. Learn more.
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- Recognized by New York Magazine & Five Star Professional as one of the "most accomplished real estate professionals in New York City."
- Ranked nationally by REAL Trends as one of "America's Best Real Estate Agents" for avg. sales price of $4.350M.
- Recognized member of the 2016 "TOWN Elite" class
- Sold a single family Townhouse faster than any other on the Upper West Side over $10M to date. (StreetEasy)
- Certified Negotiation Expert (CNE)
- Trivia: Won the 2015 New York Times NCAA Basketball Pool.
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Roberto Cabrera
Licensed Associate Real Estate Broker
New York City * The Hamptons * Palm Beach * Miami
rcabrera@bhsusa.com
o: 212-906-0554
m: 917-701-3907
Clubhouse: @cabrera_roberto
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Brown Harris Stevens
130 Fifth Avenue, 2nd Floor,
New York, NY 10011
(917) 701 3907
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