Stock Market Correction, Interest Rate Cut Driving New York City Real Estate Market Amidst Coronavirus Caution
The stock market has continued its downward slide, driven by fears of the coronavirus, but some New York Metro area real estate agents are seeing an uptick in activity, even as COVID-19, the disease caused by the virus, has been reported in the city and surrounding suburbs.
Ian Slater, an agent with Compass, said beyond some people not shaking hands and more people using the Purell he always has out at open houses and showings, he hasn’t seen an effect on the market.
“Just last week, we had the highest number of luxury contracts signed in New York City since 2018, in the face of the fastest stock market decline,” Slater said.
The Federal Reserve’s emergency interest rate cut and the start of the busy spring market may also be motivating buyers.
“The lowered interest rate certainly has everyone’s attention,” said Robin Kencel, a broker with Compass in Connecticut. “I was with buyers on Sunday that were looking at Fairfield County properties for the first time, and on Monday they made an offer on a property. The lowered interest rate was definitely a factor for these first-time buyers to step forward and present a winning bid in a multiple offer situation.”
After a disappointing 2019, with the passage of a new mansion tax and inventory up, the spring 2020 selling season has been poised to be busier.
“We’re seeing a lot of activity, way more than we saw in the fall and much of last spring and people seem relatively unfazed in their purchasing decisions by this,” said Lindsay Barton Barrett, a broker with Douglas Elliman. “When we’re representing sellers, we’re looking at things in aggregate. Do we still have people coming to our open houses, do we still have web traffic? We look at everything.”
Parisa M. Afkhami, an agent with Warburg Realty, said she’s received many emails expressing interest in seeing apartments and attending open houses recently.
“Real estate seems like a safe bet despite volatility in the stock market,” Afkhami said. “Also, with the coronavirus, people are staying home and appreciating home in a different way. The market swings are nail biting and a home is a safe secure investment that makes people feel good.”
That doesn’t mean the coronavirus, and resulting stock market correction, hasn’t had any affect on the real estate market, however. Seattle-based brokerage Redfin has already reported an impact on the housing market there.
“With respect to our own clientele, our own buyers, we haven’t had anybody say we’re not going to buy because of this, but I’ve seen it with other brokers,” Barrett said. “I recently bought a house upstate and I am friendly with the broker there. She has said that she has had people step out of the market and that doesn’t surprise me. The second home market is going to be hit earlier as well because buying a second home isn’t as urgent for most purchasers than for somebody who needs to buy a new home out of necessity.”
Compass agent Justin Martinez said a client who had submitted an offer on a new development in Long Island City didn’t want to increase her offer, fearing that the stock market will drop further.
“I am working with another client who has an accepted offer for a townhouse in Harlem and says that if there is another historic drop in the stock market, he will most likely back out of the deal,” Martinez said. “My response to both clients was that the real estate market will get more competitive since a lot of people with wealth are going to sell their stock and take advantage of the low-interest rates.”