2021 Outlook: What to Expect for the New York City Real Estate Market

With the arrival of 2021 comes new predictions for the year ahead. It goes without saying, New York City faced a very tough 2020 as a result of the Coronavirus pandemic. The real estate market came to a near halt of in-person showings and activity was ceased from March-late June. 

While many Media Outlets wrote of the mass exodus to the Suburbs and a bleak state of the Luxury Market in New York, the market actually turned a corner once in-person activity resumed in late June. In fact, some weeks of 2020 had higher contract activity in luxury properties than 2019. 

People will always need a place to call home, and we saw the power of that throughout much of 2020.

We are all entering 2021 with  guarded, yet hopeful optimism that we will turn a corner towards normalcy. We expect the market to continue its Pandemic recovery, barring any unforeseen circumstances of a large resurgence of cases, etc. The arrival of the vaccine which is expected to become more widely available as we progress into 2021 should help curb another lockdown.

What Do We Expect for 2021? We largely expect persistent demand from Buyers as the narrative shifts away from “New York is Gone” to a narrative of opportunity and recovery. We’ve already seen that the story the Media tried to paint of NYC in a post-pandemic world was not the reality. Some folks that originally left the city have already returned or have plans to return in the near future. New Yorkers and those in the surrounding areas are betting on New York Real estate and taking advantage of discounts in a big way.

Fight of the Boroughs:

We anticipate the battle between top Borough in the city to remain heated in 2021. As a result of the Pandemic features like  more space,  outdoor space, and  in-unit laundry became priorities. All of these features could be found in Brooklyn which help contribute to the borough’s post pandemic spike in activity, however, reduce pricing has made Manhattan more affordable to more people…which will win?

Buyers Will Continue their Return:

Buyers have been entering the market since the lockdown was lifted. We saw a strong uptick in market activity in June 2020 when in-person showings resumed. The year finished on a strong note, and we expect Buyers that  are serious and  know they are staying in  New York  City to take advantage. There are many factors that are driving Buyers including low interest  rates  as well as increased wealth. Many New Yorkers of means actually saw an increase in wealth during 2020 thanks to a sharp rise in Tech Stocks as well as the ability to retain employment remotely.

Low Rates Here to Stay:

We expect Mortgage Rates to stay low in 2021. Will they may inch up slightly throughout the course of 2021 (we saw numerous record lows set in 2020!), rates will remain historically at low levels. Low Rates have drastically been increasing purchasing power of both new Buyers and Homeowners looking to roll their equity into a larger home.

Deals on New Development:

The Manhattan  Luxury Condo market has been overburdened with Supply for the past few years. While some Developers have been rolling out discounts and incentives in 2019/2020, we expect discounts on new inventory to uptick. Developers are at the mercy of project financing - they need to get units sold and move onto the next project so they can pay their lenders. This means great opportunities for Buyers of New Development.

Shifting Preferences:

What ranks as important to Buyers will likely shift as Consumers continue  to  evolve their needs and wants coming out of the pandemic. We know that the multi-functional homes are a must and people now prefer outdoor space to the latest appliances, but we expect that these preferences will continue to be refined heading into  2021. In New York, there is likely to be a resurgence with  Boutique buildings with  minimal amounts of units compared to  large buildings with hundreds of homes.

6 Things That Can Hurt Your Property Value

When you want to sell your property, you hope that everyone will see its value, just as you do. You might believe that all you need is some home fragrance to make your home smell fresh and lovely and a bit of tidying up. However, you should know that certain things can hurt your property’s value, or at minimum, not help to show its full value to prospective Buyers. While you might not even be aware of them, they can have a significant impact on the price of your property. To get the best deal when the time for sale comes, make sure you are familiar with the things that can bring down your home's price tag, and work to minimize them in your home.

Unpleasant smells can hurt your property value

Offensive smells leave a lasting impression and can decrease the value of your property. It might be the pet odor, mold, or cigarette smoke. Keep in mind that strong home fragrances might mask the odor, but they might also signal that something is wrong with the home. The safest way is to remove the source of the smell and thoroughly clean your house. Dusting and vacuuming regularly will help, as well as wiping down and disinfecting the bathroom and kitchen. You can consider hiring professional cleaning services to take care of your home before you decide to open your door to potential buyers.

Renovations not executed properly

Many homeowners decide to do significant renovations for the purpose of increasing property value. They might choose to build a deck or remodel a kitchen, but it might not have the desired effect. The first reason for this is that they're not really skilled enough to undertake a major DIY remodeling project. Another reason is that the repairs are, although executed properly, maybe too personalized or unappealing.

The way to avoid this is to hire professionals to undertake this kind of project. But before that, check out what real estate agents recommend. After you find a trustworthy advisor, you might realize that some of your ideas wouldn't really increase the value of your NYC property, as you initially thought.

Contact a real estate agent and ask for their opinion. They can offer you a lot of help during the process of selling your property. With their knowledge of the NYC market, they can provide invaluable information on what is currently hot on the market. If you take the agents' advice, you have a better chance of getting a higher price for your property.

Excessive clutter

Excessive clutter can hurt property value, and every home has accumulated unnecessary items
throughout the years. While you stop noticing them after a while, a potential buyer might get the
impression that your home is cluttered.

Decluttering is not hard; it just takes some of your time. A professional decorator or organizer
can take care of this, and as a result, you will add value to your home. You can donate, sell, or
throw away any unnecessary items.

Kitsch design

The minimalist design is perhaps, the best way to go. Avoid personalized decoration and quirky wallpapers. You want the buyers to be able to picture themselves living there, which might be challenging if your style is present in every room. An excellent way to deal with all those sentimental and personal mementos would be to rent a temporary storage unit and place them there until you have sold your home.

Poor maintenance of the exterior

Remember that the exterior is the first thing on your home that potential buyers see. If the paint is peeling, cracked, or faded, the buyers will not get a good impression. It's also a bad idea to paint your home in bold colors; stick with neutral and more popular colors, such as white, gray, cream, or beige.

An unattractive yard

It makes sense that an unattractive yard is one of the things that can hurt your property value. While a yard that's in bad condition might repel buyers, landscaping can prevent this. However, keep in mind that trees that are too close to the house can negatively affect your property's price as well, as they might present a potential danger in the buyers' eyes.

Take care of the things you can

Prices of property fluctuate as a result of many different factors, and it's essential to know the things that can devalue it. Some of these things will be absolutely out of control, like the neighborhood, interest rates, market conditions, and the economy. However, some of the factors are absolutely in your control, so there's no reason not to take care of them.

We Can Help You Bring Your Home to Market with Our Exclusive Compass Concierge Service

Compass Concierge will assist you with the execution of a tailored plan for updating and staging your home for prospective buyers. We will front the costs associated with home-selling improvements and collect a fee for the services rendered at the time of the property’s closing. House preparation services include staging, painting, deep cleaning, landscaping, and decluttering.

 How It Works

• Our team will develop a tailored project plan with suggested home improvements and updates to prepare your home for the market.

• You will contract directly with home improvement service providers.

• Compass Concierge will pay the associated cost for home improvement work performed subject to your agreements with home service providers.

• At the closing of the property, Compass Concierge will collect a fee that covers the cost of the work performed.

 This is just scratching the surface of what this exclusive service can offer our clients. Additionally, while Compass Concierge helps Sellers, there are also ways that this program can help Buyers as well.

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What Do Low Interest Rates Through 2023 Mean for Real Estate?

The Fed signaled in its September policy meeting that it will the federal fund rate in the 0-0.25 percent rage, with the expectation that rates will remain near zero until 2023.

This decision by the Fed did not come as a surprise as some decisions in the recent past given the impact of the Pandemic and the need to sustain liquidity in financial markets. The language from the Fed indicating a direction until at least 2023 does give investors expectations for the next few years, and was a welcome relief for the real estate industry. 

The Fed will continue to buy mortgage-backed securities

The Fed has vowed it will continue to purchase mortgage-backed securities in an effort to ensure that banks keep lending during the downturn. 

This additional liquidity has allowed Mortgage companies to continue to lend money during the pandemic, at what has been a record pace for both refinancing and originations. 

Mortgage Rates Likely to Remain at Historic Lows 

The Fed’s Bond Buying has been instrumental to low mortgage rates. Because of their commitment to continued buying of mortgage-backed securities (number 1), it is likely that mortgage rates will remain at historic lows for the near term. While it not a guarantee, the Fed’s influence on the Bond market has been instrumental, and mortgage rates are most influenced by the bond market.

Existing Homeowners have Low Rates for Home Equity Lines of Credit (HELOC)

Equity has been on the rise thanks to increasing home prices. With increased equity, and the desire for access to affordable financing, many have turned to HELOCs.

The cost of HELOCs are currently affordable and will likely remain low as they tend to adjust fairly quickly to changes in the federal funds rate. Those that have balances on their HELOC will continue to enjoy low interest expenses.

Overall, low rates are a positive for the real estate market. We have already seen the impact of pent up demand from Buyers during the market with record mortgage origination numbers, and reduced time on market coupled with multiple offer scenarios.

What is a Co-Op and Why are They in Demand?

If you follow our newsletter, blog, and other content, you’ve likely seen us mention condos leading the board for demand over the past few years…what about co-ops? 

Many are unfamiliar with the different property types in New York City, most notably condos and co-ops. There is a seemingly endless debate of pros and cons of both, but there is a new interest in co-ops emerging as a result of the pandemic. 

To set the stage what is a Co-Op?

A Co-Op, short for Cooperative, is an ownership interest in shares of a corporation that own the cooperative. The number of shares owned is directly correlated to the size of the apartment in the building. These shares entitle the shareholder to a proprietary lease on the unit.

To contrast, a Condo represents ownership in real property so there is a big distinction in ownership interest between the property types. 

As a Co-Op owner, you are responsible for monthly maintenance fees which typically includes property taxes as well as items such as the building’s mortgage and interest, insurance, management fees, building employee salaries, and common area upkeep.

Co-Op Appeal Increases During Uncertainty

With Condos being the leading star for many years, what is making Co-Ops appeal to more Buyers than usual? The pandemic has actually positioned aspects of Co-Ops that previously put Buyers off as a positive amidst uncertainty. 

Co-Ops are notorious for their strict vetting process and Boards. In times of uncertainty, this becomes attractive to Buyers. Co-Ops typically examine a Buyers credentials and finances with a fine tooth comb, ensuring they have enough liquidity to continue to pay their mortgage and maintenance charges despite and unforeseen circumstance. 

In hard times, you are less likely to find a Co-Op owner that passed the Buildings Board vetting to be defaulting on a mortgage. In turn, that means less risk of assessments and hits to the building’s financials. 

Some Co-Ops are loosen their once very strict rules as Buyer demographics are shifting. This includes some allowing pied-a-terre purchases as well as increased financing limits.  

This trend is not new, in fact, we saw a similar attraction to Co-Ops during the Great Recessions of 2008. It is important to note that there are Co-Op buildings that have survived the Great Depression, World Wars, and 9/11 - some of the toughest times economically.

Upper East Side Co-Op On the Market

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315 East 72nd Street, 10C

Located in the heart of the Upper East Side, this rarely available oversized one bedroom 1 bathroom co-op apartment is your chance to live on beautiful East 72nd Street. This fully renovated, bright and airy apartment is a great value in a full-service co-op building.

Learn More About This List

Manhattan's Luxury Market Shows Signs of Life: Best Week Since March 2020

The Manhattan luxury market continues to see positive signs of increased activity. Most recently, the week ending July 26th marked the best week for Manhattan’s luxury market since March. This also coincided with New York City entering the final phase of the New York Forward plan, Phase 4.

15 properties priced $4M and up went into contract during the week ending July 26th. Digging in, deals were characterized by discounts which comes as no surprise, however, many Buyers are likely unaware of the magnitude of the deals that can be had. On average, properties going into contract had a discount of 18%. A Buyer’s market coupled with historic low interest rates create opportunities that could reward serious Buyers handsomely over the longterm.

During the same week last year, 14 homes priced above $4M went into contract, so 2020 actually represented a slight YoY increase in contract volume. Additionally, a report on new developments showed the highest number of sponsor contracts in the city since the beginning of April. 40 sponsor contracts were signed the week ending July 26th, an increase of 17 since the prior week. 

A mix of property types including 9 Condos, 4 Co-Ops, and 2 townhouses

Understanding the Headlines

It is important to understand what is happening in the New York City housing market before falling victim to the peril of headlines such as “Real Estate Prices Fall Sharply in New York”. It is important to remember that, particularly within the luxury sector, discount from asking has been a common theme to deals for nearly 2 years - if you subscribe to our monthly newsletter, you are familiar that this has been a persistent theme. 

Additionally, Q2 2020 data should be taken with a grain of salt as drawing out longterm trends is difficult. Showings were legally not allowed during Q2 as a result of the Pandemic, so activity inherently came to a near halt. With less homes being bought and sold there is less data, and with less data it is important to remember that baselines can be easily skewed. This year’s Q2 data is based on a much smaller sample size which can skew the median price.

We expect Q2 2020 data to show a decrease in price YoY. This comes as no surprise knowing that activity was not allowed, however, because of the lack of data coupled with the inability to show, the viability of this data for longterm trend analysis is not ideal.

Furthermore, the comparison point to a year ago, namely Q2 2019 was characterized by unique activity itself. Q2 2019 had elevated activity because of the rush to close before the start of the new progressive Mansion Tax. Thus, a period of low activity (2020) compared to a period of high activity (2019) both from unexpected outside factors, creates a comparison with flawed data points.

Should You Invest in Smart Home Technology?

Thinking of putting your home on the market or looking to make improvements and wondering what area of your home you are likely to see a return on your investment? Investing in Smart Home Technology should be placed near the top of the list. 

A smart house is equipped with any number of devices that can automate tasks normally actioned on by a resident. The Smart Home market has exploded in recent years and includes devices across many different areas of the home such as:

• Lighting

• Appliances

• Speakers

• Doorbells/Locks

• Security

• Cleaning Systems

The Smart Home Industry is projected to reach 135.3 billion globally by 2025, up from 78.3 billion in 2020.t

How valuable is Smart Home Technology? According to a recent survey from Z-Wave Alliance, a consortium of 700 companies that make smart home devices, 91% of real estate agents polled said their Buyers would be willing to pay more for a home outfitted with Smart Home devices and 92% of real estate investor said they are putting money into smart devices to make homes more connected.

With such a variety of smart devices available, what categories are most desirable? 

Security:

Security devices are one of the leading categories within the smart home space. They make people feel safe and allow them to monitor their home from anywhere via a smartphone. In fact, approximately 1/3 of people that bought smart devices said they did so to make their home feel safer.

SMART LOCKS + DOORBELLS 

Rather than hiding your spare key in a fake plastic rock, take ease in knowing your home can only be accessed by those you trust. Both you and future buyers will appreciate this smart feature

SAFETY FIRST

“Owning a safe and secure home is appealing to every home buyer, from frequent travelers to families,” according to Realty Times. Investing in an alarm system, smoke detectors, and cameras can be big selling points. 

Energy Efficiency:

Devices to help manage energy efficiency are preferred by Buyers. From lighting and shades to managing the thermostat, the devices help owners run their homes in a more eco-friendly and efficient fashion. Plus, automation allows users to set lights to automatically come on or turn off and run heating/cooling systems on automated schedules.

INVEST IN NEST

A Nest thermostat can help reduce electric bills, which can be a great perk for a “green” and frugal buyer. Plus, lower energy bills will help you save up for that dream home you've been eyeing.

Market Update: Manhattan Q2 2020 Market Report

We are halfway through 2020 - hard to believe. With all that is going on in the world, time has seemed to move at a relatively quick pace. Q2 2020 was one for the record books. The new year started off on a positive note for the Manhattan real estate market - strength had been carried over from 2019 across multiple tiers of the market. As we approached the start of Q2, no one was anticipating the magnitude of impact the market was going to experience. 

The final two weeks of the first quarter brought never before seen conditions to the Manhattan Real Estate market. 

While we hope that Q2 2020 is an outlier when we look back on historical quarters, it is important not to write off the entire quarter, but rather acknowledge the data and understand the impact of the pandemic during the observed time period.

Coronavirus Impact on Manhattan Market Evident in Q2 Data

Understanding the sweeping restrictions that were put into place in New York City that included the suspension of real estate showings, it comes without shock the YoY data is significantly lower when comparing 2020 to 2019. During Q2, the real estate market was essentially put on hold, the first time in history. 

• Contract Activity was down 73% YoY

• Sales were down 65%

There are a few key thoughts worth noting on the data above:

1. The Contract Activity number actually could have been lower, however, the industry nimbly adapted to digital tools including virtual open houses, enhanced 3-D staging, and virtual closings.

The use of digital technologies will only continue to increase as consumers implement tech oriented solutions throughout all aspects of their lives to make it efficient and safe.

2. This data is important to be aware of, but it likely does not have long term predictive value knowing the restrictions that were placed on the industry with physical showings halted. In that sense it is expected, and we hope this quarter to be a Black Swan event

Sales Statistics

• Co-ops sold 26% faster than condos with 1 bed Co-Ops moving the fasting - 47% sold within 60 days

• Condos purchased in Q2 were more affordable than previous quarters because of property variations, not discounts or undervaluations

• Downtown captured 28% of sales, the highest of any submarket

• Properties in the $5-$10M range were priced 7% higher on average YoY although property size was also 8% larger, resulting in a 2% decline in average price per square foot

Looking Ahead

Monitoring data points in Q3 and beyond will be critically important to understand long term potential. In-person real estate activity resumed in late June, and the news came as contract activity was beginning to pick up.

The Pandemic will certainly leave lasting impacts on the market, and as of now, we see that in the form of consumers looking to leverage technology as much as possible to ensure safe and efficient business transactions as well as shifting preferences. 

We expect increased interest in private outdoor space, home offices, layouts with defined spaces, and in the city, a renewed interest in townhouses and boutique buildings.

We will continue to monitor the pent up demand that has begin to re-enter the market.

New York Back to Business: What You Need to Know About Safe Real Estate Showings

As part of the New York Forward program, New York City moved to Phase 2 on June 22nd, 2020. As part of Phase 2, limited in-person real estate activity resumed. In light of the evolving situation around COVID-19, we are taking precautions to ensure the safety of our clients, prospective buyers, and team. 

You should always be guided by your own sense of personal safety and know that we have the tools and resources to power transactions 100% virtually. However, know that when you view a property in-person with our team, we are taking the following safety measures and adhering to State and Local government guidelines.

Setting up Private Showings

Prior to a showing, we will work with Buyers to ensure that they are financially qualified to view the property and that they have also virtually explored the home via photos and 3D tours available online. 

Once interest is confirmed, we will work with the listing agent to schedule a private showing. We will ensure we are organizing the showing in compliance with the respective building and management guidelines. 

In light of COVID, the following paperwork will be completed:

• REBNY’s Health Questionnaire: screening questionnaires to ensure those entering a home are not a known risk for possibly having COVID

• REBNY Limitation of Liability: this form serves to acknowledge that the party entering a property, or who is permitting another to enter party to enter a property of the potential liability that may result from exposure to COVID

• We also strictly follow the New York Department of State Fair Housing Disclosure guidelines

*Sellers are NOT allowed to be at the property at the time of showing

Getting Your Home Ready to Show

Prior to allowing prospective Buyers or Renters into your home, we follow best practices to ensure hygiene and reduce contact during the showing as possible.

Before showings of our listings, we ensure:

• All inside doors are open to reduce the amount of contact on high touch surfaces such as door knobs. We sanitize and wipe down door handles before and after each showing

• Sanitizer/Soap/Paper Towels available

• We wear gloves and face masks at all time. Face coverings are necessary for all those entering the property during the showing

• Curtains open, windows open where possible, and air conditioning units on to increase air flow and circulation

Ensuring Success During a Private Showing

In-person attendees limited to Seller’s Agent and Buyer with the Buyer’s agent attending virtually

Six feet social distance maintained at all times throughout the showing. Note that if a property size or configuration does not allow for social distancing, only 1 individual will be permitted in the unit at a time

Only Seller’s Agents will open doors that are needed, cabinets, etc.

Seller’s Agent will escort the Buyer to the lobby prior to the arrival of any subsequent appointment

After a Showing

After each showing we conduct for our listings, we once again clean and sanitize

• Clean and disinfect keys

• dispose of gloves/booties used

After a successful showing and cleaning of the unit, all necessary follow up will be handled with prospective buyers or their agents via phone and email.

Evolving Guidelines

As the situation surrounding COVID-19 is ever evolving, we continue to stay up to date on the latest guidelines issues by Federal, State, and Local Governments and Agencies. We will continue to keep our network updated on the latest guidelines.

Questions about how we are handling showing properties and conducting business during Phase 2? Reach out with your questions via the below form

4 Tips to Transform Your Outdoor Space into an Oasis

With summertime here and many looking to get outside (safely), outdoor space has become one of the most coveted amenities. In fact, thanks to our proprietary Compass Search Data, we have observed that searches for outdoor space have doubled since Shelter in Place started.

Whether outdoor space is the top of your list for your next home, or you are thinking about how to spruce up your current private outdoor space, we are sharing tips on how to create an Outdoor Oasis.

Most of us will be spending a lot more time within our private outdoor spaces this summer. When you think of your outdoor space as extension of your indoor living space, you can get the max value out of the space. Outdoor spaces do not have to be large to function as a multi-functional space that the entire household can enjoy.

Play With Textures and Colors

Just as you think about design in your living room, bedroom, or any room inside, apply the same ideas to your outdoor space. Textures and colors are key parts of a successful design. Incorporate textures and colors in throw pillows as well as furniture cushions in your outdoor space. Ensure furnishing are comfy and durable.

Add Potted Plants

We love adding plants to our home office as well as other indoor spaces…they even have air purifying benefits! Potted plants also help to make your outdoor space lush. Add your favorite flowers in pots, and also think about adding larger potted plants to help create privacy.

Choose an Area Rug

An area rug will be key to creating your outdoor oasis. Area rugs help to define spaces, and this is key to making your outdoor space feel like it has different “areas.” If your outdoor space is large enough, consider placing an area rug under your dining table and one under your patio furniture to help create a lounge space versus a dining space.

Pick a fun pattern that compliments your furniture, cushions, and umbrellas for an additional “pop”.

Set the Mood with Lighting

Up the ambiance with outdoor lighting – perfect for setting the mood whether you are relaxing with a glass of wine or doing late evening entertaining, outdoor lighting will round out your outdoor oasis. String lights are an easy way to cast a warm glow over your space, however, if reaching an electrical outlet is difficult consider all the solar options that are now available.

5 Plants to Grow Indoors for Improved Air Quality

In recognition of Earth Day, we are sharing some fun facts about something all around us…air! This year, we have seen interesting facts on air quality as a result of the Coronavirus pandemic forcing much of the world to come to a halt – images have surfaced of cities that are normally blanketed in smog with some of the highest visibility we have seen in recent years.

What about indoor air quality? Since Americans spend nearly 90% of their time indoors, healthy, quality air should be a top priority. Controlling Indoor Air Quality (IAQ) can start with the HVAC system in your home and be supplemented by room-based air purifiers as well as natural options such as plants.

Having plants around your home can not only make a room look beautiful, but certain plants can actually aide in removing toxins and chemicals from the air including formaldehyde, carbon monoxide, and benzene.

5 Purifying Indoor Plants

Fiddle Leaf Fig

Because of the Fiddle Leaf Fig’s extremely broad leaves, it is very efficient at purifying air. The plant can also help control humidity. They do require a lot of sunlight, so be sure to position them appropriately!

Spider Plant

Spider plants are easy to care for, and fun to watch thrive in your home as the offshoots grow and hang over the pot, hence the name spider plant. They do well in indirect sunlight. Note they do not like damp soil so be sure they are drying between watering.

Rubber Tree

These plants have been shown to absorb and break down harmful chemicals in the air. Similar to the Fiddle Fig, their broad leaves make them efficient at doing so. In fact, they take in the carbon dioxide we exhale and convert it into oxygen.

Aloe Vera

Follow the succulent trend while cleaning your air with aloe Vera. These easy to care for plants clean the air of benzene and formaldehyde. They prefer a sunny spot to grow. The added benefit of having aloe is that you can use it on your next sunburn.

Dracaena Marginata

Also known as the “Dragon” tree, these plants have been shown to remove 4 out of the 5 major indoor air pollutants. This makes them the perfect plant to improve air quality while adding a fun vibe to your home with the plant’s resemblance to palms. Note they can be toxic to pets