When the Covid Pandemic hit in mid-March, the New York real-estate industry literally ground to a halt. Many property buyers and sellers went into quarantine. Residential real estate sales in NYC plummeted 40% in July and by 57% in August compared to the same period in 2019, as people moved to the countryside. Still, many industry experts, like Schelton Assoumou, predict that the property sector in New York will, as it always does, eventually bounce back. They cite the eventual rebounds that followed the Great Recession, 9/11, and the financial crises of the 1970s and 2000s.
This is particularly so because people are now gradually moving back to the City. However, this time, they prefer New York’s suburban Burroughs, such as the Bronx, to enjoy facilities such as a private garage, unlike in Manhattan. For example, Bronx’s Riverdale neighborhood has seen the average prices of home increase by 30.2% over the past half-decade, and there is reason to believe the trend will continue despite the Covid Pandemic.
The real estate market in NYC came out of lockdown in June with the onset of Phase 2 of the reopening plan. Once again, in-person showings are allowed. The inability to view available properties during lockdown had led to a dramatic decline in transactions. However, Covid-19 has resulted in one positive critical development for the real estate market – lower mortgage rates across the US. 30 year fixed mortgage rates are now nearly 1% point lower than at the beginning of the year.
As work-from-home and social distance orders pushed residents out of the City to the countryside, some real estate investors, brokers, and developers are placing their hopes on a mini property boom in the NYC suburbs. If the current real estate trend holds, areas and zones such as the Bronx and Brooklyn that were once considered too remote for city dwellers will likely enjoy a bump in sales and rental activity. The sleepy suburbs of NYC are being shaken awake.
As part of a real estate trend predating the Covid-19 Pandemic and now accelerating as a result of it, banks, hospitals, private medical groups, and a slew of online retailers are quickly snapping up vacant sites, empty stores, and obsolete offices in the suburbs.
Where are People Moving?
The Covid-19 Pandemic had seen wealthy New Yorkers and many other urbanites ditching their townhouses and metropolitan high-rises for second or brand new homes in the countryside. With the Pandemic on the decline, it now seems that city diehards are now slowly making their way back to the City, only that they are now making different choices.
Those returning are now looking for houses in the suburbs that offer social distancing, more greenery, and extra space for a private backyard. They are making permanent moves to locales that are less-dense where daily life doesn’t entail crowded sidewalks, shared elevators, and subway cars. We are talking about suburbs such as the Bronx and not expensive areas like Manhattan.
Although NYC sales activity is down by 42% in June, all four boroughs, including the Bronx, are reporting increased sales. According to one poll, almost one-third of Americans are now considering shifting to a less densely populated locale because of the Coronavirus. The priority now is larger apartments with private outdoor space and enough room for a home office.
Local housing developers are betting on big shifts as New Yorkers continue warming up to less-dense areas in the suburbs. With thousands of NY urbanites now sheltering in the countryside, the Covid-19 Pandemic is driving profound societal changes that could spur new real estate opportunities for the NYC suburban property market.
In September 2020, in the Bronx, the median list price of homes was $550K, showing a 5.8% trend year-over-year. Today, the Bronx is a buyer’s market as the supply is greater than the demand for real property, which gives investors a great opportunity.