Big cities expected to face ugly economic recovery: Charlie Hurt
The Washington Times opinion editor and Fox News contributor Charlie Hurt explains why major U.S. cities are facing fiscal concerns as city dwellers are fleeing to the suburbs.
Phase 2 of the reopening for New York City began Monday.
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Restaurants are allowed to open with outdoor seating as New York City enters the second phase of easing coronavirus restrictions.
Offices, hair salons, retail stores and playgrounds in public parks are allowed to open, with certain restrictions, during phase 2.
For professionals in real estate, their business is open again on the island of Manhattan, the global destination that took a hit when the city became the first American coronavirus epicenter.
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“During the three months of the coronavirus shutdown real estate came to a halt," said broker Arlene Reed of Warburg Realty. "There were a few deals made through virtual showings but they were at the low end of the market or were based on buyers having seen a property prior to the shutdown.”
Broker Rachel Lustbader, also of Warburg Realty, added: “There has been a dramatic decline in the number of deals made over the past three months, but there have been some. Since those deals have not yet closed, we do not have an official record of the contract prices. From what I have personally seen, the prices have varied depending on the market sector but on average they have between 5-7 percent less than they would have been pre-COVID.”
Ryan Kaplan, a young real estate agent, pointed out the real estate market was affected by a huge time of uncertainty.
“Those who had the means to remain in the market were rewarded — they had little competition to deal with and fairly reasonable pricing to tee off negotiations," Kaplan said. "On both the sale/purchase and rental sides, my partners and I negotiated discounts from 20 percent to as much as 30 percent off asking prices, which is not common in any market cycle for a city as prime as New York — even if in a downturn. I would note that discounts were more starkly offered in new development projects. Developers have construction loans and investors with repayment milestones —therefore their urgency to move product, especially in a challenging market, is greater than that of private owners who don’t necessarily have expensive debt or third-party investors to redeem.”
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The future of the city’s real estate market is uncertain, with concerns including a possible second wave of COVID-19, how schools will reopen, recession and the presidential election, but agents rely on the resilience of New York.
“New York City always bounced back," said Warburg Realty broker Maria Daou. "There are a lot of buyers out there and they will find their homes in the city. I don't think it will be a mass exodus but some will leave. Some will just buy bigger places in the city maybe with outdoor space or a home office because as we quarantined we found out how nice it would be to have that extra space/room to work and how nice it is to go outside without a mask.”
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Kaplan added that he “couldn’t be less worried. There were similar predictions of NYC losing its luster after 9/11, and then again after Hurricane Sandy, but neither of those events had any lasting impact on its desirability.”
He said he isn’t just optimistic but also expects an upturn: “And if anything, it may happen a lot sooner than we think. Unlike prior events, which caused prophecies of Manhattan’s demise, the pandemic is particularly unique in that it restricted human-to-human contact. Quarantine has starved people of social interaction and from enjoying their lives — I think people will want to be in the epicenter even more so now than ever before. Those who act and plant roots now can find some great deals and will likely end up being rewarded. Simply stated, if Manhattan were a stock, I’d buy it.”
He doesn’t think the predictions and speculations will pan out.
“The suburbs are lovely, but they will never be able to offer what living in the city provides," Kaplan said. "Accelerating your career, meeting new people, immersing yourself in cultural amenities, and even dating are much harder to do there. The city will always be a magnet for those who want to surround themselves with life’s opportunities. There may be a brief period where its population is thinner, but once all of those who fled realize there are one or two good restaurants in their towns, no theater, limited networking and 11 people to swipe through on their dating app of choice, they’ll come back.”
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