According to a recent analysis by real estate market data firm UrbanDigs, the Manhattan real estate market is currently in much better shape than it was during the Great Recession. Like most industrys adjusting to pandemic life, however, the future is still very unclear and fearsome.
The report claimed that there were much more sellers than buyers during the Great Recession but now, during the Covid-19 pandemic, that gap is much smaller. Noah Rosenblatt and John Walkup are the cofounders of UrbanDigs, and recently claimed that they believe this gap has lessened because the Great Recession was a strictly economic crisis in America while the coronavirus has halted every single aspect of life for everyone, regardless of socioeconomic status.
“The lack of sharp spikes in supply and a corresponding drop in demand suggests the market is not as one-sided as the Great Recession, although lingering virus fears will keep a lid on demand for the time being.”
The report heavily focused on comparing the supply and pending sales of the past six months with the first six months of the recession as well. They also focused on what’s known as the “market pulse,” which essentially is the ratio of pending sales to actual supply. A lower ratio number would reflect that there are more sellers than buyers.
In September 2007, supply increased by 10% every quarter and pending sales were dropping at a rate of 30%, according to past analysis’. The 15 quarters that followed showed a steady increase in supply, and a major drop in pending sales; 50%, dropping the market pulse from 1 to .16. When the pandemic initially shut everything down in March, there was a major drop in pending sales, which boosted supply, however, it was nowhere nearly as quickly as it dropped in 2007.
The market pulse is currently at a .22, which has been expected due to a general pulse decline within the past five years in Manhattan; in late 2019 the pulse was at .3. Rosenblatt and Walkup noted that sellers today in the metropolitan are still facing the heaviest competition in nearly a decade due to the increase in properties available, and willingness from sellers to negotiate their pricing. “Clearly, the economic impact of the pandemic has yet to be fully tallied, but in the meantime, it appears that the market for Manhattan real estate is functional, just fearful.”
Overall, however, the two believe that comparing the state of the market now to what it was during the Great Recession is like comparing “apples to oranges.” While there may be many general similarities the differences fully outweigh them. There have been spikes in the unemployment rates during both events, however it’s broken major records within the past six months because the job losses are more sudden and frequent. The two do believe, however, that whenever this pandemic does come to an end unemployment will hopefully bounce back quickly, and the supply and demand of the market will follow.
“NYC real estate and the economy, in general, are weighing other exogenous forces so with that in mind, certainly, there is more room for real estate to go down, but in the long run, the city will renew itself, even if the process might be bumpy.”
Industry workers believe now would be a great time to invest and negotiate in real estate if you are lucky enough to have that ability right now. They also believe that Manhattan hasn’t seen the absolute worst that the pandemic can do in regards to negatively impacting the market and sales, so like the rest of the country and its many industries, they’re taking every precaution currently imaginable to stay afloat.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at email@example.com.