Jonathan Miller: Assessing The Impact of COVID-19 on Manhattan Real Estate

First Republic Bank
May 11, 2020

There’s no denying that, in just a few short weeks, the spread of COVID-19 has already had a massive impact on real estate. With unemployment rates on the rise and social distancing measures in place, activity has fallen significantly. As a result, real estate professionals are wondering about the future of the industry.

With that in mind, Jonathan Miller, President and CEO of Miller Samuel Inc., shared his insights on how the real estate market has changed in light of the pandemic and what we may see going forward.

The virus caused an industry-wide slowdown

Miller has observed that real estate markets nationwide have been impacted in a similar fashion. While the first quarter of 2020 was nothing short of robust, once the virus became a national concern, real estate activity stopped almost immediately.

In Miller’s mind, the industry pivoted around March 15, 2020, when the Federal Reserve performed an emergency rate cut on a Sunday, just a few days after the previous cut. From that point, he says that listing activity began steadily falling across the country.

Market data from Douglas Elliman shows that Manhattan is no exception to this phenomenon. While previous data makes it clear that listing activity is usually up by as much as 9% in March — a sure sign of the coming spring market — this year, it’s down by 8%. In total, that’s a 17% swing.

In comparing Manhattan’s data to the 35 unique real estate markets that Douglas Elliman currently tracks, similar patterns emerge. Miller cautions, however, that beyond those figures, most of the data that we have right now on the impact of the virus is purely anecdotal. It’s still too early to know the full extent to which COVID-19 will affect real estate.

Industry professionals are still moving forward

Despite the crisis, many industry professionals are still working in innovative new ways to keep their businesses up and running. In a discussion following the webinar, Miller shared some additional insights, including that, in New York City, technology is taking on an even more crucial role in real estate.

“The brokerage community is using technology to their advantage,” Miller says. “They’re doing video walk-throughs of listings to try and sell homes. You’re seeing things like podcasts and webinars becoming a mechanism for rounding out the knowledge of prospective buyers and sellers.”

As a certified appraiser, Miller can also speak to what the appraisers are doing to try to close loans during this time. Though, since stay-at-home orders vary by state, the methods used in one locale may be different than another.

In New York, Miller says that he’s seeing a mix of approaches. In a drive-by appraisal, the appraiser walks around the outside of the property but doesn’t go inside. Some are also doing curbside appraisals, where the seller provides a video walk-through of the home for the appraiser, or desktop appraisals, which are done entirely online.

The question remains, though, of how long real estate pros will need to continue with these no-contact alternatives to the traditional way of conducting business.

Signs of optimism in an uncertain future

No matter what type of stay-at-home order people are under, the question on both brokers’ and consumers’ minds is what the future of real estate will look like. While Miller admits that he does not have a crystal ball, he predicts that the market, at least in NYC, may see more demand in the fall.

That’s because the educational materials that agents are producing while in lockdown are having the desired effect. “We’re seeing listing traffic and [the number of people] viewing broker websites rise,” he observes. “People that are housebound now are doing their homework.”

On the buyer end, Miller believes that first-time buyers will be the first to respond after the crisis, hoping to score a deal in the post-COVID landscape. Unfortunately, high unemployment rates may knock some would-be buyers out of the market. For their part, Miller posits that today’s pent-up sellers will provide more inventory once things re-open in the fall.

All that said, predictions are wholly dependent on how much damage is done by the pandemic. Miller believes that the longer these stay-at-home measures are in place, the shorter the crisis will be. The less damage there is to the economy and the market, the faster the real estate economy will bounce back.

The bottom line

We’re likely to see an entirely new market after this crisis. When asked how he thinks agents should prepare their clients for the new landscape, Miller’s advice was simple.

He recommends that agents prepare their sellers for the fact that we could see a buyer’s market start to emerge. By the same token, he advises agents not to let their buyers get too comfortable. Instead, encourage buyers to take steps to shore-up their financing before they start shopping for a home, such as getting a pre-approval from a lender.

Above all, though, his message is one of reassurance. “We all will get to the other side of this,” he says. “Just use this time wisely to prepare for when we get back up and running.”

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