The Pandemic Market is forecasting a recession.

The Real estate sector plays an integral role in the U.S. economy. Residential real estate provides housing for families. It's the greatest source of wealth and savings for many Americans. With primary residences being a source of stable investment for many people, having a place to live (and now work from)during the pandemic has become all the more valuable. Many young professionals in lower paying jobs left the city and moved back in with their parents or family to brave the storm of unemployment, infection, and rising crime rates in NYC.

How does the decline people and the workforce in Manhattan trickle into our economic outlook?

Real estate affects many other areas of economic well-being that aren't measured. For example, a decline in real estate sales eventually leads to a decline in real estate prices. That lowers the value of all homes, whether owners are actively selling or not. It reduces the number of home equity loans available to owners. This ultimately reduces consumer spending as more homeowner cash is tied up in home projects.

Almost 70% of the U.S. economy is based on personal consumption. A reduction in consumer spending contributes to a downward spiral in the economy. It leads to further drops in employment, income, and consumer spending. If the Federal Reserve doesn't intervene by reducing interest rates, then the country could fall into a recession. The only good news about lower home prices is that it lessens the chances of inflation. [1]

Currently Mortgage Rates are hovering around 3%. Similar to 2008’s Financial Crisis Stimulus plan, the Fed will continue to keep rates low to try and motivate buyers and consumers to absorb some of the real estate inventory that is flooding the market place. Manhattan Supply is approaching levels last seen in 2008, indicating this is a very buyer-friendly market.  With inventory this high, buyer’s have negotiating power and are securing favorable deals.  Coupled with the record low interest rates, which increase a buyer’s purchasing power, this is may the the BEST time for you to purchase.  

We are starting to get the first looks at the COVID price discounts as deals begin to close.  Initial data points to a 12-15% discount.  As expected, larger and more expensive apartments are seeing larger price discounts than smaller and less expensive units.  

Below is a FANTASTIC video which takes us back to Economics 101. -- "How the Economic Machine Works." Created by Ray Dalio this simple but not simplistic and easy to follow 30 minute animation of the market cycle we are currently in.

Now might be the best time during the market’s decline to purchase prime spaces in the most iconic city in the world, particularly as a pied-a-tier until a new mayor is elected in 2021. Contact me to learn more.