Are we having fun yet? (corona)

ever = never (typo)

@stache - movie rec and new thread much appreciated!

Although I loathe Trump, the one thing I have always appreciated about him is his ability to reveal his supporters’ true colors. Coming from a background of the most genteel self-denying racists, I like it that he has left them nowhere to hide. Same is about to happen with the value they place on human life. DJT ultimate response here will track healthcare debate, and I predict that the most vulnerable in our society will ultimately be knowingly be sacrificed by policy makers.

Old thread
https://streeteasy.com/talk/discussion/45608-is-it-time-to-panic-yet

Has anyone had contracts cancelled (and deposits returned) because of Coronavirus?

Commercial but deposit retained by seller:
https://www.wsj.com/articles/sl-green-815-million-deal-to-sell-new-york-city-office-tower-falls-apart-11585100373?mod=mhp

What about discounts? Any sellers agreeing to some lower price to close?

That deal you linked more fell apart than was cancelled. I'm meant more like buyers (or sellers) wanting out of a signed contract.

Seems like crime is on the rise.
https://www.boweryboogie.com/2020/03/starbucks-on-delancey-street-robbed-at-knifepoint-days-before-knifing-outside-its-doors/

My sellers are pulling their properties from the market during "the pause," expecting to sell them in the fall. The thorn in my side is a property that I need to get painted; buildings are generally not letting workers in, so I couldn't market it via video even if I wanted to. Chatter on some other real estate boards is that buyers in deals are eager to close (because rates are favorable) but due diligence is slow, and managing agents are trying to figure out remote closings.

As of about 10 days ago we had 6 deals with contracts out. 4 are putting things on hold, one signed a couple of days ago, another is just trying to sort a few things out but wants to sign. Our last traditional closing was a week ago today, a bit tense to say the least regarding social distancing protocol. This buyer actually purchased a townhome remotely (Scandinavia), we've done multiple deals with them over the years. So for the right buyer, a video tour could be just the ticket. the bigger problem was there last minute flight to get from Europe to New York...

Of our 14 deals in contract all want to move forward and as Ali pointed out most are looking to close sooner than later. We're also working on figuring out the whole remote closing thing, seems a house or condo all-cash deal won't be any issue. Any financed deals and especially co-ops will certainly be more tricky. we have a new development deal scheduled to close, all parties agreed to remote walkthrough, bank is fine with a remote closing.

Another stumbling block is the fact buildings are not allowing move-ins and I don't believe movers get an exception to work.

Interestingly, we submitted two offers yesterday! both actually quite reasonable (same person). No response from one seller, other seller is drawing a line in the Sand over 25k! (2.5m). About 10 days ago we had a negotiation going on, had about a 200k spread between our best and final and seller. Seller's agent called me yesterday that their client would now like to accept our bid, unfortunately 10 days is an eternity in this market, my client wants to wait two weeks and see where things are at that point.

I've also had a number of conversations with people I would call opportunistic buyers.

A little update from my small world.

Keith Burkhardt
TBG

I don't know why closings should be so difficult (actually I do, I'm using that idiomatically) because in many places closings are done in escrow and no one shows up at the closing except the Closing Agent.

I think a seller drawing a line in the sand today over 1% is being an idiot.

Movers are on the "essential list," problems are on the building side. Where I live there have been several move-ins/move-outs over the past few days.

We are definitely seeing lots of units being taken off the market (UrbanDigs Resales Supply
-8.4% from prior month
-10.6% from prior year); not sure why we're not seeing this translate into a spike in "Off Market" except number seems to be lagged 9 days (so I would expect huge spike very soon).

End of month numbers 1 week from today should be VERY interesting.

I thought about you 30 and what you said in the past, when this seller was walking away from a very strong offer. In 2 months they might have to take a $100k less.

Good to know about movers I had even checked in with my attorney who is unclear.

UrbanDigs quoted in The Real Deal (re: activity in the past week):

Contract signings were nearly halved to 109 from 214 in the same week last year.

The number of listings that went live sank by 79 percent with a mere 98 sellers pressing forward. In 2019, there were 459 new listings in the third week of March, which is typically one of the busiest months for owners to list their properties.

Finally, the 448 properties that were removed last week represent a 276 percent increase from the 119 taken offline in 2019.

Keith,
If you don't mind at some point in the future posting what it actually goes for as opposed to the offer you brought, please.

Obviously I won't identify listings that are currently in play one way or the other.

Here's some additional info:

Ask 2.675
Our bid 2.5
On the market less than a month.

I think the "on the market less than a month" is the killer. The listing needs some seasoning before the seller realizes the situation. Obviously you couldn't post about what it eventually goes for until it actually goes (who knows? It could end up selling for more than the current asking price - but I doubt that will happen).

On the SL Green deal 300 posted about above the buyer is supposedly walking away from a $35 million deposit.

I am an MD in Manhattan that owns multiple private practices in the boroughs and has a massive network of MDs.

I have been talking to everyone about this pretty much for 8 weeks now. Needless to say our country's response is laughable. We could have avoided much of this by acting early.

That aside, what people are completely missing and why this situation will likely not get better is that many assume that if there is a 1% mortality elderly rate & that this is the problem. Quite honestly, that part is simple. People die all the time from the flu, as every armchair epidemiologist knows now.

But there is a serious problem with this analysis which people are about to find out soon (I suspect by 4-8 weeks it will all be clear). One that all local MDs are learning on the front lines.

This is not a disease of the elderly, like the flu. This is a disease that disproportionately affects people btwn 20-60, particularly males, even without pre-existing diseases (whether there is some immunological or genetic issue that compounds this is yet to be known) vs other infectious diseases that we have dealt with. Specifically, ~15-20% of people are getting hospitalized and ICU stays up to 4-10% are common even in the younger demographic. I know of 3 MDs already that have been intubated (all under 45). The oldest of which is an Ob/gyn that didn't interact with any obviously positive covid patients.

You can kill off everyone over 60 (I think Americans would do this if they could anyways), but I don't think Americans can stomach 20 and 30-somethings from being intubated by the 1000s (or prob 10 or 100ks). Nor will they be able to handle the loss of MDs & nurses to the system that has thrown them into war with sticks and stones instead of tanks. The disease is spreading rapidly in hospitals, so currently the entire med system is already gridlocked, a problem worsening by the hour.

So the real problems are the knock-on effects, such as normal healthcare for heart attacks, strokes, accidents, cancer, etc. Should people still get treated for a heart attack if over 65? If so, where? What about chemo for someone with stage IV cancer? Does it make sense now & what hospital? I think by now it is common sense that if your finger gets fractured, you may be better off staying at home.

Additionally, by next week, vents will likely start to fill up and decisions on who to pull off vents will have to be made. Probably several 100 or 1000+ decisions/day. As these decisions percolate, people will wake up eventually and realize why other countries locked down so hard, so fast. Also, if we run out of vents, it should also be obvious that the mortality rate amongst the young will go up rapidly. How many vents does NYC need right now, prob ballpark 30x what we have right now.

Finally, response from everyone of my MD friends in the ERs or ICUs or pulmonary care in regards to Covid vs the flu - not even close. The flu is a joke. No MD walks into a patient with a flu and then moves out of the apt to avoid spreading the illness. People don't even wear masks in the room! No flu patient (ok maybe rare ones) rapidly desat in a few hrs and get vented. Definitely not a 20-something! No flu has ever caused one of your colleagues to get admitted to the ICU!

None of us have ever seen this before.

What's very confusing is the high % of people that get this with only mild symptoms. I'm not pointing this out to diminish the harsh reality of what we're going through. Just honestly puzzled. I now personally know of a handful of people that have dealt with this, from relatively mild to essentially the the 'flu' x 10. Why does the virus discriminate? Why are children relatively untouched?

I've spoken to a number of physicians both friends and clients who 3 weeks ago thought things were being blown out of proportion. Low mortality rates, primarily killing people older than 70 with underlying health conditions. One of them is now on the front lines in a busy Queens hospital, her perspective on this now has completely changed.

I usually skip the "state of the market" emails that brokers send - it's always a good time to buy!!!! So I appreciated this one from Compass that seems a bit more sober and pragmatic.

***

LISTINGS
Most sellers are holding off on listing for the time being. The majority of listings that were already on the market, have stayed on the market as we try to determine next steps forward. We are seeing that the forced time away from work and typical responsibilities has lead otherwise time crunched buyers to spend more time online searching for properties. For the most part, listing prices have not been reduced as we can't conduct showings and it is difficult to determine if/what price corrections may be needed.

SHOWINGS
Showings have slowed significantly since the outbreak. As fear spread and travel plans to NYC were cancelled, some brokers began conducting virtual showings for buyers who couldn't view in person. It isn't yet clear if the virtual showings have resulted in any new deals. On Friday, Governor Cuomo banned all in person showings.

DEALS CURRENTLY IN CONTRACT
It isn't surprising that some buyers would like to renegotiate their contracts. With the dramatic drop in the stock market these past few weeks, some buyers no longer have the funds to close. Others fear their property is now worth significantly less than the contract price. Many are citing Force Majeure, as a loophole for exiting existing contracts altogether or as a tool to renegotiate the contract price. The general consensus amongst real estate attorneys, is that it will be very difficult to get out of most contracts and cause both parties to incur exorbitant legal fees and spend years in court. Sellers may need to work together with buyers in order to achieve the best outcome for both parties. For example, if a buyer can’t complete a purchase due to a job loss which in turn causes them to lose their financing, a seller may prefer to agree to keep a portion of their down payment rather than the full down payment. This may keep the buyer from tying up the property in litigation which will prevent a new buyer from purchasing it. Buyers and sellers need to work together during these unprecedented times.

CLOSINGS
Unless you are buying a building/house in cash, it will be difficult to close right now. Even though many aspects of the closing can be done virtually, most management companies have cancelled/postponed closings. If you are financing and didn't have your appraisal prior to last week, you won't be able to until the ban on nonessential business is lifted. [NOT TRUE - the Miller Samuel blog had a detailed discussion of desk appraisals.]

IMPACT ON PRICING
The actual impact on pricing won't be immediately determined. Decimated stock portfolios and COVID-19 related layoffs/pay cuts, will push prices lower in many cases. There will still be buyers but it will be even more of a buyers' market than it was prior to the virus and many will be opportunistic buyers. Deal flow may stall as buyers and sellers adjust to new market conditions and seek to determine fair pricing.

80% are indeed mild, that's the problem. That's who spreads the infection.

The 20% hospitalized rate & the 5% ICU rate is the issue. It's not the 1% (or whatever) mortality rate.

Btw, many MDs that are not practicing in one of the hospital ERs or ICUs also are not worried. But I've watched my MD friends change week-by-week. In almost every case it takes a friend of theirs to get intubated to wake up (whether pt or colleague).

Would only talk to people who work in those environments to really understand what's happening. That's where I am getting 99% of my info. That's prob also ~1% of all MDs at most.

anonymousbk, thanks for being in healthcare. Working in other fields, it is a giant disruption to our lives to be penned into our tiny apartment, but you and your colleagues are who we're doing it for. Be well.

ali r.

@george I get the same speils via email that you do, and yes some are cringe worthy. I also get it in real time, just yesterday, " we're not lowering the price, in three months there will be bidding wars!". Okay thank you very much and best of luck to you and the seller...

I love the real estate business, and the vast majority of agents are a great bunch of compassionate, hard-working people. Unfortunately some are just clueless...

The email you send is nice because it just makes sense in a very matter-of-fact way. I've also received some very compassionate emails from agents themselves, just trying to put a little bit of love and positivity into a dark and chaotic situation. We really are all in this together, from Prince Charles down to a 6 year old in Tallahassee Florida. And I truly believe, especially in these extremely polarizing political times, something truly great will come out of this tragedy the whole world is experiencing together. Sorry if that sounds a little bit corny. But drawing from my own experience with life, every tragedy has been met with great opportunity, success and growth.

https://www.wsj.com/articles/as-coronavirus-cases-grew-some-wealthy-buyers-still-bought-multi-million-dollar-homes-11585223136

“In all three cases, the seller is taking less than they hoped to get, but that’s not really a change from the past few months anyway,” she said, referencing the recent softness in the New York luxury market. “And the possibility that we have a recession coming was already baked into New York City prices.”

Pinocchio's nose is growing. Two month ago it was "just a supply/demand issue." So NOW a recession's already baked into the price... riiiiiiiight. Wonder what the next excuse will be for why the ask simply CANNOT go any lower

Keith,
In my experience there is a certain percentage of agents on both sides who simply pass on whatever nonsense their client spouts no matter how ridiculous it is. And I don't think they are doing their clients any favors by doing so. They are simply acting like waiters/order takers. I believe as agents we serve our clients by being buffers. We push back when they say/do something silly, and while we always execute their instructions we don't put the lunatic fringe spin on it when we communicate the instructions to the other side. If in three months there are going to be bidding wars they should take the unit off the market for three months and sell it then. We only get to transact in today's market. I've made it clear where I think the market is headed, but if some buyer wanted to buy something at 35% off today's prices because "the market is going down" my response would be "I don't disagree but you don't get to buy in tomorrow's market." If you are a buyer and want to but in tomorrow's market then wait till tomorrow. If you are a seller and want to sell in tomorrow's market then wait till tomorrow. But whatever you say doesn't affect today's price - your choice is either transact today or not.

In my mind the only people who should be on the market right now are those that NEED to transact. And if you need to transact then do the deal in front of you. I suspect that we will have a lot of bullshit from people who have been full of shit for years and don't realize that in the frenzy of the overheated market if a few years ago they were doing deals in spite of people seeing through their bullshit, not because of it, because they had something people wanted an they were willing to look past it. But when it succeeded in spite of them they took it to mean that it was "working."

In the "actions speak louder than words" department Compass laid off 15% of their staff because they are projecting a 50% drop in revenue. What does that say about where they think the market is headed - bidding wars?

https://www.tmz.com/2020/03/26/barbara-corcoran-coronavirus-real-estate-market-buyers-dream/

10 open houses reported to Fritz last week. 6 had zero attendance, 4 had two visitors each.

I can't find the link but evidence shows that nova spread in some Hong Kong apt buildings through the ventilation system so I have sealed off the vents in my kitchen and bath. The paper also said that nova REALLY likes central air. I will post this link when I can find it. Cheers!

I would think only if air is recirculated it is worrisome. Most residential central acs there days provide cold and hold water to the individual unit.

Hot water

When I lived in bpc, we would get cigarette smoke entering our bathroom vent, so we covered it up. This was a fresh air vent routed to the roof. I was told the design was faulty, so this can happen.

Indeed. Kitchen smells from one apartment to another via vents are very common. Most of the vents do not have back draft protectors and building central exhaust systems are rarely balanced. Smells travel easier and much farther than viruses.

I'm hearing some ugly stats from a nationwide lender.

- Both refi and purchase applications are falling rapidly in the last few days as rates rise, each down by at least a third this week across the bank, across all their products. The MBA says 30 year rates are up 60 bps since the start of the month.

- By the end of the week, half of scheduled closings were being pushed out, even when they can be done via remote online notaries. It isn't always clear why closings are pushed, but I'd have to believe that some pushes are due to buyers being unable or unwilling to close.

Buildings who's supers are sophisticated enough to switch their mushroom caps to constant rather than cycling should probably instruct them to do so. I think there are probably buildings who haven't had their vent stacks cleaned in decades.

I recently had an experience in a fancy building where the powerful roof exhaust was running full speed and the apartment I was renovating was getting backdraft due to system imbalance which is very common. We had to put our own central exhaust with backdraft protection damper connecting to central exhaust duct.

George: I saw that trend as well, where mortgage rates are actually going up even with massive intervention by the Fed. You have to wonder where they would be without Fed action. If that doesn't change in the near future, what other factors are remaining to support real estate prices?

Not only are rates rising, but the underwriting box is tightening. Lenders are fearing another round of negative nationwide home price appreciation, so what was OK in Feb is not OK in March. E.g. 90% LTV is now 80%. 41% DTI is now 38%. Ironically, lenders might create a self-fulfilling prophesy.

With NYC having a lot of buyers' wealth severely cut recently and probably no foreign buyers right now, financing matters more and more even into the NYC luxury segment.

The Murphy's Law consequences of driving down mortgage rates to 50 year lows trying to stimulate is that when they go back up a little, even though they are still at astoundingly low numbers, it has the opposite effect.
https://www.forbes.com/sites/alyyale/2020/03/25/homebuyer-interest-plummets-amidst-rising-mortgage-rates-covid-19-concerns/

Not to sound like a wise guy, but it doesn't take a Rhodes scholar to know that the real estate market is taking it on the chin right now (along with the equity and bond markets). What's going to matter is how quickly markets will recover once the fear of the coronavirus leaves the marketplace and society. And eventually it will. It's difficult to think about opportunity when so many people are suffering physically and psychologically. But this is setting up to be one of the greatest buying opportunities that I can remember. Right now we can speculate on real estate valuations, however, I think it's going to take us about 3 to six months to get clarity on where real estate pricing settles out.

For me the big difference between owning stocks and a home, one you need and one you don't, whether you're renting or owning. I haven't given a second thought to my home, other than very thankful I have a nice place to shelter my family in. Now my stock portfolio, that was a different story, that caused some real agita.

Here's a pretty simple get very reassuring interview with Dr. Fauci.

https://youtu.be/r3miPW-wkfk

Here's the link I was looking for. It's about SARS so take it as you will.

https://www.hindawi.com/journals/av/2011/734690/

If it's going to take 3 to 6 months to figure out where prices are going to end up, but everyone knows there is going to be a major impact, I think you'd be pretty foolish to pull the trigger on something unless you were getting at least a 25% discount off the last reasonable comparable sale unless you absolutely needed to buy something right now.

30, let's say you're a seller and you bought in a year starting with "1", so you have a rather material gain and don't really need to sell. You've spent a year chasing the market down and rejected offers above the current list price. You've moved to your retirement community in Arizona and are done with NYC. Someone comes along tomorrow offering 25% off the last comparable. Do you take it? How many sellers actually would? I suspect very few.

For forty years, NYC real estate has gone only one direction. Why not another 40? Just wait and there will be a swarm of buyers in 3 months when all is back to normal.

"For forty years, NYC real estate has gone only one direction. "

Nonsense.

That's even more reason to sell today at -25% off the price you would have seen in January, no? So, would you sell?

George I think that very much depends on the seller and their personal financial circumstances. But there's no disagreement today's not a good day to be a seller, or about to start retirement...

I just don't think 30 would sell at the price where he'd buy. Which is probably true for most ppl in the market. So we have a huge bid/ask spread and hence nothing will move.

I can't wait to see how some of these brokers and sellers react when they see how impossible it becomes to sell coops in most of Brooklyn, Queens and The Bronx.

Keith, are you planning to do anything with your stock portfolio? Were you a net buyer vs seller over the past few years, and what about this upcoming year?

Been in s&p, qqq, iwm for 9 years. Over the summer I put all non retirement into Cash (Marcus). Went 75% cash with with retirement funds when the market was down approx.13%...Now I wait.

Keith

Looks like contract activity for March is going to come in as down >25%.

What's really difficult right now is getting business that is in contract closed. Since real estate has not been deemed an essential service, we're basically frozen. We tentatively have a couple of closings scheduled for April through the cooperation of title company, banks, attorneys and managing agents. Both our buyer and seller clients are anxious to get closed for various reasons.

All cash deals on condos and houses are much more manageable.

Audio only "The last two people in the world" Stiller & Meara
I remember seeing this on Ed Sullivan when I was a kid.
https://www.youtube.com/watch?v=Vkxjozui2Bs

I think that every day that closings get delayed there is a higher likelihood that the deal will fall apart.

I ordered a portable AC, just in case.

Some good information on projections for corona in the US.
http://www.healthdata.org/research-article/forecasting-covid-19-impact-hospital-bed-days-icu-days-ventilator-days-and-deaths

http://www.healthdata.org/sites/default/files/files/research_articles/2020/COVID-forecasting-03252020_4.pdf

https://olshan.com/marketreport.php

2 luxury contracts signed. TWO.

"Stat Geek Alert: Was there ever a time when we saw 0 contracts signed in a single week? Yes! December 21-27, 2009."

I'm pretty impressed that two were signed, considering the current state of things.

30yrs...regarding sales and the outer boroughs...Presumably you mean they will be impossible to sell with optimistic list prices?

I have had eyes on units that already made steep discounts e.g. https://streeteasy.com/building/1020-grand-concourse-bronx/17f
or had reasonable increases on previous sales e.g. https://streeteasy.com/building/42_22-ketcham-street-elmhurst/b5b6
or started off with an appealing asking price e.g. https://streeteasy.com/building/2601-glenwood-road-brooklyn/3j

Any listing under those circumstances will move surely? I can't imagine any of them offering 25% off? Will it be worth the sellers taking off market? Presumably the carrying costs and the eventual new listing prices wouldn't be so much more improved vs getting to sell now.

If you haven't seen this -
https://weather.com/coronavirus/l/545c13293d55dcd5e420dae5ea260f0d43f0f2b69060de7a8ac684d9439f3b27

Clickable map by all US counties showing cases/deaths updated daily.

Anyone with a Fannie Mae loan can get a three month forbearance on their loan payments just for the asking, no documentation required. The period could very well be extended. Also a loan workout program will be offered for future payments when the forbearance period ends. Credit report will not be affected.
People with jumbo mortgages could also get a break. I am not certain if the stimulus bill provides for this, but some lenders may participate regardless.
But to be sure some sellers will not be hard pressed to sell.

The paltry two contracts signed illustrate the bid/ask spread that we saw earlier in this thread. Sellers believe they can hold out for a while and sell when things get better. They aren't seeing the market glut that buyers are. Sellers who held on had the right strategy after 9/11 - by 2003, the market was on fire - 1 or 2 years later. In 2008, it took till spring 2013 for the hot market to return = 5 years. In 2001, there was a severe shortage of inventory, with little having been built since the '80s. 2008 had a lot of inventory, and today, there's an absolute glut. It could be 10+ years before we see another hot market for Manhattan property. Buyers see the glut; sellers don't. Buyers can wait.

bigger issue is that the post office is slow as heck. several neighborhoods in NYC haven't received mail in over 2 weeks. outgoing and incoming rent checks are stuck. good luck for people expecting their stimulus checks. 3 weeks? what a joke.

According to what I've read about the CARES act, you can apply for mortgage forbearance which can be extended up to 12 months. Most banks now have a link up where you can apply for this fairly easily through their website.

stimulus checks will be automatically deposited into your bank account if your Bank routing number and account number are on your tax return.

The SBA has recently added a new page as of last night to help you streamline applying for a small business disaster loan. If you don't qualify for the loan, my understanding is many will be eligible for a $10,000 Grant.

https://www.sba.gov/funding-programs/disaster-assistance

showitthefro,
My point is that historically there are neighborhoods in NYC where in protracted turndowns people just stop buying Coops. Houses go down X amount, Condos a bit more, but no one will even look at a Coop and then you can't even find brokers who will work on them.
1020 Grand Concourse? Banks were dumping 2 BRs for $25,000. 42-22 Ketcham St? Nearby at 42-02 Layton Street same pricing. Brooklyn? We bought a 2 BR at 345 Montgomery St for $2.50 (latest sale in that line at $600,000).

For 2601 Glenwood Road look at what prices were back before 2008 and tell me it's impossible for them to retreat back to that same level.

2601 Glenwood road, my first job in real estate, working for the Weiner family. This was in like 1989. The brothers took a large portfolio of rental properties that the father and grandfather acquired and converted them all to coops. I liked the neighborhood back then and still like it. A fairly easy drive to the rockaways and Marine Park golf course down Flatbush avenue!

Keith
TBG

They were sort of the poster boys for converting buildings to get out from under rent regulations before the 1993 changes to the Rant Stabilization law. We're still renting some their unsold units.

If ever we needed a new law, a "Rant Stabilization" one would have my vote.

(couldn't resist)

To see a 25% down, we need to see new development inventories take a 25% down first.

But on the other hand, it took some time for the last 3 rounds of QEs to take effect in RE. This time even though it's a final shot of unlimited QE, it should still need some time for it to take effect on the RE market.

are any coops/condos offering maintenance/common charge deferrals or concessions to owners yet due to corona?

I don't see how they could possibly do that unless State offers some kind of property tax forgiveness period. More than likely I would see banks offering lower payment plans for underlying mortgages. Any utility payments would be a minimal percentage of operating costs. I can see some buildings reducing DM hours but I would hate to go down that road. For example my building has no outside intercom setup.

I have been occasionally chiming in on these boards for many years claiming NYC real estate was over valued.

Today it's clear the NYC real estate market is about to get smoked. A couple tidbits off the top of my head:

* The NY Times says 40% of renters may not pay April rent.
* Small businesses are collapsing (restaurants, etc) en masse across the city.
* Massive spike in unemployment across the city, it started with service jobs but this will spread to other industries.
* Tourism industry decimated.
* S&P down significantly. Massive wealth destruction.
* Will be a terrible year for finance industry, no bonuses, banks and funds will be shedding workers.
* Economy is clearly heading towards a global recession.

And all of this is set against a backdrop of over-supply, too many condos, and crazy asks in an environment where people will question whether living in a dense city like NYC makes sense.

I don't know where all of this will end up, but I do know that there will be many bankruptcies and foreclosures, there will be pain on personal and corporate levels. There will be desperation and asks will have to come down.

Over time this situation will pass and NYC remains one of the most unique and special places in the world. But right now, my view is this market is going to endure some pain. The Fed can only do so much. Best wishes to all of those who are personally impacted by this.

Tom, I think in general we can all agree, the entire economy is getting smoked. Stock/bond destruction happens in real time, we can literally track it minute by minute. It's hard to say how long it will take before real estate starts trading again and we can quantify the resetting of valuations.

I think it's a folly to try to predict short-term prices, certainly harmless enough to do on a real estate forum. But again I think we can all agree that prices three or four months out, will be less then what we were seeing in February. What that market will ultimately look like? I'm not sure. But if we can get a handle on this coronavirus through medicine, vaccines etc. and the economy starts to come back, I feel strongly there will be a number of buyers coming into the market looking for deals that haven't existed in many years.

Kevin, the question is whether sellers will be willing to accept the prices that buyers will pay. As I pointed out earlier, the right response after 9/11 was to hold on to property. There was very little inventory, prices were low relative to incomes, quality of life was improving rapidly, and the recession was mild. Today the opposite is true on all of those factors. Most sellers haven't gotten the memo yet. They look at the Dow still at 22,000, up 20% in a couple of weeks, and say everything will be back to normal soon. They'll learn the hard way, and buyers will continue to be frustrated.

Brokers, if they want transactions to happen, would be wise to stop trying to talk up the market. They are just widening the bid/ask spread.

*Keith. I know a Kevin Burhart too.

I get Kevin quite a bit... Don't forget it's 'dt' at the end (:

You really butchered it George! Lol.

Kevin doesn't have the "dt", nor the "k" :)

I'm seeing a number of real estate professionals claiming that in a few months when the crisis is over there is going to be tremendous pent up demand released, huge deal volume, and increasing prices. I think this is f*cking insanity.

UrbanDigs has Contract activity for March Market Wide down 32.1% YOY and Resale down 26.2%. April will probably be worse because we got in 1 - 2 good weeks in March and that doesn't look likely for April.

George,
There are always sellers who need to sell and those will come down. The news of those will fairly quickly circulate and that will make the market. The moratorium on foreclosures will end at some point and though it will take time but eventually foreclosures will actually occur. Then those sales will make the market. At the same time, non-payment of retail/commercial rents and unit owner's Common Charges could wreak havoc on building's financials which will suppress demand (will people buy into buildings which are going to need to enact assessments to cover operating expenses?). So while prices may be sticky downwards, eventually that dam bursts.

Tomnevers, thanks for your information and analysis.

There will be tremendous pent-up demand. Just like there's an hours-long line outside the first day of the Barneys Warehouse Sale (RIP). But the line is only because luxury goods are being sold at 50% off.

if "real estate professionals" are paid per transaction and want to stay in business, they should be telling sellers to list now (or once this passes) and be prepared to take losses in the same way that 401k's are down 30% or more, since it could be several years before real estate prices go back up. If prices rise, it's because buyers appear, not because brokers talk up sellers' expectations.

And they need to challenge the assumption that people will want to say in NYC. What's the point of being in NYC when we've all discovered that Zoom is actually pretty good? What's the point of having great amenities in a building if they can't be used when you really need them? Why buy a townhouse when townhouse property taxes are poised to double or triple if property tax reform passes? What's the point of being near a great hospital if that great hospital is so easily overwhelmed that they're loading bodies on refrigerated trucks with a forklift?

Meanwhile, I just got a StreetEasy notice about a property in my search reappearing on the market today at exactly the same asking price as it failed to sell for last year. Either they are clueless or they're secretly willing to take an offer at -30% off ask.

Theme song for those listing right now:
https://youtu.be/iVWWtqa9-7M

https://www.urbandigs.com/forum/index.php?threads/watch-contract-activity-to-see-if-this-active-season-is-panning-out.12/#post-289

Buyers will determine what they feel is a fair price and sellers will determine whether or not they're willing to accept it. And just like after any crisis/crash the best deals will happen (for buyers) very early in the recovery cycle when everyone's still shouting it's a crazy time to buy. If a seller has sufficient equity in the property and has a real need to move for either financial or emotional reasons, they will accept what Mr. market will give them and move on. Some will also have the financial means to be able to move and perhaps sublet for a few years, rather than sell in what will most likely be the bottom of this cycle. This was a head-on collision, I don't think the market will gradually decline from here, it will hit rock bottom fast. I think it will gradually improve once we get the virus in our rear-view mirror. How quickly will it improve? Time will tell.

I realize this is not an apples-to-apples comparison, but already many forget the absolute horror and shock New Yorkers were in after 9/11. We had enemies of our country hijack commercial airlines, seemingly with ease and fly them into our two most prominent landmarks and the Pentagon! I heard the same thing then, people scared to death wanting to move out, go to the suburbs, leave the city behind what's the point of living here anymore... People had to get over an innate fear that they were completely vulnerable. You could just feel the fear when you rode the subways in those months after that attack. Every time a car backfired , train stopped in a tunnel etc people were frozen with terror. But somehow they moved on and New York rose from the ashes to new highs.

New York will rise up again, this is a great City that people want to live in for better or worse. and quite frankly it's never been a particularly easy place to live to begin with!

I'm not a cheerleader because I want to see real estate prices go up so I can continue earning a living. I'm a cheerleader because I want to see people succeed, I want to see them go back to work, I want to see the real estate that they own appreciate in value! I want to see new developments succeed and sell out. This city got through the Great depression, wars, terrorist attacks, Spanish flu, the Great recession and and it will get through covid 19.

So hang in there New York! Whether you're buying or selling, it's a good time to take at least a 1 to 2 month break and reassess when we have a bit more clarity. Just like in 2009, you may see some sellers try to get out front and sell at what could be considered a pretty acceptable discount. If your a seller with a gun to your head and you need to sell; work with a good broker to help you try and figure out what that number will have to be to get a buyer interested. There are currently buyers out there, I'm speaking with another one in about 20 minutes, I would characterize them as opportunistic buyers for sure.

If you're in contract and nothing material has changed as far as your ability to comfortably pay your housing costs every month. In my opinion stay the course, and let's talk in 5 or 7 years and see if it was a sound decision. I know a handful of people who panicked in 2008 and walked away from substantial deposits, in the cases I know of personally, that wound up being a mistake. But you've got to do what you have to do and makes the most sense for you and your family.

Keith Burkhardt
TBG

@30 there are also numerous real estate professionals telling sellers to accept significantly lower bids because they can then reinvest sale proceeds into the stock market which the real estate professionals believe is incredibly undervalued...

@30 there are also numerous real estate professionals telling sellers to accept significantly lower bids because they can then reinvest sale proceeds into the stock market which the real estate professionals believe is incredibly undervalued...

I disagree that it will hit rock bottom fast (necessarily). If as I suspect the correction will be large enough that there is substantial foreclosure activity, we won't see a bottom until those foreclosures have worked their way through the system. Firstly, there is already a 90 day moratorium on foreclosures. For some that will mean they don't end up in foreclosure at all and are able to enact some sort of workout. But for others it will be "kicking the can down the road," especially for those who end up being significantly underwater vis-a-vis their mortgage balances depending on how much prices tank.

For Coops, which usual are taken using non-judicial foreclosures, the process is relatively quick (although I suspect will be lengthened due to government and public pressure to give borrowers some relief) but for Real Estate the foreclosure process can easily take 18 months (the last figure I saw was that the average foreclosure in New York State took 445 days, a number which would surely increase if there was a flood of new filings). Add whatever time it takes to gain possession, get ready to market, and go to contract and you see how long the entire process will take before the majority of potential foreclosures clear the system.

bpcbuyerconfused,
I haven't seen that, but I couldn't disagree with it out of hand, except for the risk that by the time you actually get the money in your hand from a Real Estate sale whatever stock market opportunities exist today could have easily evaporated. I guess you could do your buying on margin and then close out your position when the Real Estate closes.

For those asking about cancelled deals, here's the California Celebrity Edition:
https://www.tmz.com/2020/04/01/cindy-crawford-rande-gerber-let-homebuyer-out-of-contract-coronavirus/

I'm not convinced there will be a significant amount of foreclosures in prime NYC. I think you believed that was going to happen in 2008 and it didn't materialize (for prime NYC) anyway.

Anyone who would buy stocks today on margin is crazy.

Stocks will definitely retest the March lows.

While co-ops do not require judicial procedure in foreclosure, nevertheless the owner or former owner of the shares still has to be evicted by judicial review. That could be very undesirable for the new owner of the shares.

streetsmart,
It took us 4 years to get one guy out.

Keith,
I'm sure you will adjust your definition of "prime" to be wherever foreclosures are not occuring and then you will be right.

I’ve heard stories of ten years, and then the progressives were unheard of.

We also got an eviction order on a defrocked priest at Christmas, so I guess it goes both ways.