As the number of Covid-19 infestations and hospitalizations have been decreasing in New York state, Phase 1 reopening of businesses has slowly begun as well as in the other 49 states. However, there are still 16 states where the infection numbers have escalated over the last 14 days mainly due to increased testing. Phase 2 will hopefully be occurring in and around Long Island, and possibly Queens and New York City, over the next few weeks, allowing Realtors to finally abandon their home confinement and be able to legally and safely be in a position to meet with clients at properties.
One question I have been pondering is whether sellers and purchasers’ plans might have or might be changing due to Covid-19. Will staying in place make more sense due to the apparent and still current fear of contracting the virus? Will the lack of sufficient money be a factor and play a role in the decision not to buy a single-family detached home but instead a condo, townhome, or co-op? However, there may be those whose businesses and internet-based incomes have not been affected and are able to upgrade to a larger home, thinking there could be a better deal and more advantageous situation, especially with the current low historic interest rates. There is such a glut of luxury homes, especially in New York City where the choices are there for those who have the “mega incomes” to afford being there.
But my professional opinion is we will see many abandon the city (as I am seeing the traffic online of those looking at homes) and move out to Nassau where prices (and no city income tax) are so much less per square foot than the average one bedroom that has been going for $1 million in the hot spots of the city and Brooklyn. The exodus out of New York state will also be exacerbated, too, because of Covid-19 and the burdensome cost of living as people move to less congested states. Other states are providing job benefits as well and some have no state income tax as we have here.
Currently in Nassau, where towns have homes priced at $1.2 million and higher, there is more room for negotiation than for homes at lower price points. Average sold home prices have increased 10.59 percent and median sold prices are up 9.11 percent over the last six months. However, due to Covid-19 contracts are down 68.78 percent over the last six months through April 2020. Closed transactions are down 37.29 percent.
The higher-priced homes are taking much longer to secure a buyer, bringing the time to sell or the absorption rate up to 10.5 months, and once May statistics are out that number will most probably increase. The statistics relate to the number of listings that are on the market as well as buyer demand and relation to seller contracts. The third quarter (July-September) could show a bounce-back based on many economist’s predictions, which is positive.
However, I am waiting to see how many jobs and businesses (especially restaurants and retail) are permanently lost, not only due to the virus but to the effects of consumers’ only choice for the last two months — purchasing what they need online via Amazon and other internet portals. Even commercial rentals will be adversely impacted since a new way to go to work is at home through the internet as companies decide to reduce their office footprint going forward.
Also, how many homeowners will not want to move and just live their lives staying in place due to the new health and safety regulations that are in effect? Choosing to stay will require retrofitting their homes as they age in place into their golden years and making their living environment easier and safer to navigate, adding a stair lift or even building a master bedroom on the first floor. But if the desire to move is the answer, then maybe the solution is to find a ranch-style home where everything is on one level. It is extremely complicated and the path that we take in the “new norm” of how we live will have so many varied twists and turns that will interact with each other. Having a solid plan as much in advance as possible will help in reducing the stress and anxiety that will result in all the necessary and required decisions that many will face and deal with. However, I do believe things will improve over the next few years and that the American Dream is still strong and alive, especially among those creating families and who want to build their future wealth and leave their rentals behind.
Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck. He has earned designations as a Graduate of the Realtor Institute (G.R.I.) and also as a Certified International Property Specialist (C.I.P.S). Just email or snail mail (regular mail) him with your ideas on future columns with your name, email, and cell number and he call or email you back. For a consultation, he can be reached by cell: (516) 647-4289 or by email: Phil@TurnKeyRealEstate.Com to answer any of your questions or concerns.
