Since Covid-19, the Manhattan real estate market has seen its listing supply drop to about half of what we are used to seeing this time of year. This is due to would-be Spring sellers waiting to list their properties and others pulling their listed properties off the market. The latter has occurred to such a large scale that there are currently almost as many homes off the market as there are on the market. This is something we haven’t seen before or at least since the recording of real estate data. As you would imagine, the number of signed contracts is also down. This is an important metric to note as it is the real-time demand indicator.
On the brighter note, that declining trend of weekly signed contracts appears to have flattened. We need a few more weeks of data know for sure, but hopefully we will see those numbers start to increase soon. It is also important to note that it is taking significantly longer to get into contract as attorneys must maneuver through a whole new set of obstacles to complete their due diligence. I am working on one that is in its fourth week and I just heard of one that took six weeks to get signed. This could be contributing to those lower numbers. Time will tell.
The majority of sellers wishing to pull their homes off the market have already appeared to have done so. During the first two weeks of the pandemic, 800 units came off the market, compared to just 200 during these past two weeks.
Even though buyers currently have more leverage, you can still sell your home in today's market without giving it away.
If you are a seller in this market, you are in one of two situations: either you need to sell now or you’re not in a hurry. If you feel comfortable having your home shown virtually, you should have your home on the market. If you don’t feel comfortable, then obviously don’t. The low inventory cuts down the competition and buyers are looking. Now, some of these buyers may be bottom-feeders, but if you are working with an experienced agent, they will help you sift through those and bring real buyers to the surface. The key piece of advice I have for sellers is to be patient.
Broadway in SoHo, April 20, 2020
It is a great time to be a buyer for those who act now. There are many sellers who need to sell now are negotiating very favorable terms to get deals done. It is important to note that deals are CREATED in this market and aren’t necessarily reflected in the asking price. This doesn't mean a fire sale, but there are good deals to be had. Experienced brokers are advising their clients not to reduce their prices as they are expecting serious buyer negations.
The purchase process is best described as in a state of slow-motion. With management company offices closed, it is taking longer for attorneys to complete their due diligence. Building restrictions have affected the ability sellers/buyers to move-out and move-in. Attorneys have already started to adapt to this new reality by getting some management companies to agree to email the minutes (previously not an option), creating a Covid clause to protect against any Covid related delays, and structuring post-closing possessions for those who are unable to move out before closing.
Financing has been a hurdle of its own. Banks are backed up with mortgage applications, delaying the rate at which they can process loans. Banks are asking that closings to be scheduled no sooner than 90 days from the date of contract signing. Many banks have also altered their mortgage financing options and tightened their guidelines, limiting options for buyers. Banks are also doing employment verification 48 hours before closing vs 30 days we were used to. I strongly recommend that buyers who need financing make their offers contingent upon financing.
The new normal is one where the sales process takes longer. It will take some time for things to get back to a normal pace, so be patient. No matter which side of the transaction you are on, there will be compromise to some degree. Now more than ever, it is important have a team of highly experienced professionals to help you navigate and achieve your real estate goals.