Impact of Covid-19 on Rental Prices in NYC- Everything You Need to Know

With thousands of causalities, New York is one of the badly affected states in America with COVID-19 and the pandemic has changed the living style of New Yorkers. People have been asked to stay at homes, schools have shuttered, bars and restaurants are largely closed, and that’s only beginning to scratch the surface.

New York Real Estate is one of the many industries impacted by Coronavirus. The property officials didn’t take much notice when the first corona case was reported in NY in early March. But now the picture has changed completely; buyers, sellers, and agents are all sailing across uncertainty. So in this guide, we will take a deeper look at the actual position of NYC Real Estate.

What’s happening in NYC Real Estate?

Renters and homebuyers are forced to see the properties virtually, tenants are unable to pay their rents, and top real estate websites are not posting their listings. Stats predict that COVID-19 will hit NYC real estate largely and the effects may be long-term.

Virtual Showings

In-person viewings are a vital part of any real estate sale but social distancing measures have paused open houses in New York. There were early concerns among the industry in early March when a real estate company was closed for one day after one of the brokers was exposed to someone who later tested positive with the virus.

To cope with the situation, brokers are shifting their in-person approach to digital listings. Many real estate agencies are using YouTube, Facebook Live, and Instagram to do a virtual open house. While those transactions started before the pandemic are processed online.

Reports showed that almost 2000 virtual listings were added on the property websites and half of which were added in the last 2 weeks of March. With its 3D Home Tours, listing websites have facilitated landlords to take a panoramic view of the properties. According to stats, the number of virtual listing visitors for sales listings has increased thrice in the last few weeks.

As the situation gets worse day-by-day and stay-at-home orders are in place, virtual tours are the only viable option for the landlords.

Young Renters Suffer Disproportionately

According to a report of World Economic Forum, from April 1 people aged under 35 are facing difficulties paying their rents. And that’s what happens in the United States; one-third of African Americans and young New Yorkers are facing troubles keeping up with their rents. It was further reported that in the first week of April, millions of Americans couldn’t pay their rent due to unemployment, and these numbers are expected to increase in May.

Tenants living with family members or roommates are facing major financial setbacks than those living exclusively. Renters with the full lease are losing their roommates and searching for new roommates because the roommates are either staying friends or family or just have lost their jobs.

Landlord’s position

New York property owners are also facing a crisis and playing safe by keeping their units off the rental market. According to the stats, the number of landlords offering rent deduction on lease signing has decreased 20 percent. According to economist Nancy Wu:

“In times of lower demand similar to what we’re seeing now, landlords often take their properties off the market and wait until demand normalizes again before listing”

Whereas those who are keeping their properties on the market are offering incentives like short-term leases and many are avoiding listing inventory for the time being. And with less rental income, landlords are not able to fix apartment issues, pay building staff and make a mortgage payment.

But there is a flip side to the coin – some New York landlords are waving off rent payments to give tenants a much-needed relief in the corona crisis. A landlord of 18-buildings in Brooklyn suspended April rent and another in Manhattan is letting off three-month rent. New Yorkers are good at one thing; help each other in bad times and that’s what landlords are doing in this crisis.

Impact on Housing Market

March is a shopping season in New York Real Estate. Inventory was touching its peak before the pandemic and in a fortnight from March 16 to March 27, sales listings in the city dropped 72% as compared to the last two weeks. Only 541 new listings were shown on their platform in the last two weeks of March.

To maintain social distancing and to avoid in-person contact, landlords and tenants are avoiding listing inventory right now.

Impact on Rental Prices

Before COVID-19 hit New York, rental prices were touching the sky. And the last time rental prices fell, was during the financial crisis of 2008 when rent fell 10% in Manhattan. However, predicting the exact impact of corona on NY rental market is not possible as many factors are involved in it.

No significant change has been seen in the rental price after the pandemic hit the city. But a large rent fall will be on the horizon if New York heads into a post-pandemic recession. According to the reports, outer boroughs are more likely to face losses just like Manhattan did during the 2008 crisis.

In the rental market, 54% of the decline was recorded in new listings compared to the previous two weeks and a 57% drop from the same period in 2019.

It’s too early to predict the impact of a pandemic on the rental market. Right now the only change seen is in the contraction of demand and supply. Only a few rentals are hitting the market and hardly any renters are looking for an apartment.

NYC Govt. – Standing with Renters

New York lawmakers as well as govt. representatives are doing their best to help renters cope with their payments. Advocates and policymakers have proposed rent-freeze facility for the tenants during the pandemic. A few days back, New York mayor Bill de Blasio demanded a rent freeze in the city. However, landlords are protesting against the freeze as the proposal was made for one million regulated apartments in the city. Blasio asked the board to meet remotely and approve the proposal in a few weeks.

Tenant advocates, lawmakers, and even the landlords are pushing for strategies that would give renters much-needed relief. A tenant rights group ‘Housing Justice for All’ has launched a relief package of $10 billion to compensate in terms of utility payments and rent payments.

Our Findings

COVID-19 has largely affected the real estate industry of New York, from tenant to landlord everyone is surrounded by the financial crisis. However, this situation has given birth to Virtual Listing and many properties listing websites are making agents use 3D videos to sell and rent apartments.

To predict exact downfall in the real estate in NYC, we will have to wait for the next 6-12 months. The prices will largely depend on how quickly New York will control COVID-19. If the pandemic goes out of control, we might see a financial crisis like 2008 when property values tumbled.

Last but not the least, your safety is a top priority at the moment. If you are looking to sell, buy or rent property, have patience and wait until normal routine resumes or you can contact NY Rent Own Sell for further guidance.