The current pandemic has undoubtedly changed the world economy dramatically for quite a while to come. For real estate investors, the specter of 2008 and the fall out from 911 looms eerily for us all. The important thing to remember on both occasions was that the economy not only recovered but flourished. While I have no crystal ball I can remember my fear in 2008. I went from doing 300 closings a year to nothing in 6 months. I voiced my fears to my business partner who reassured me that things would improve and the following year turned out to be one of our best ever.
One thing we should all bear mind before making any real estate decisions was that the US economy was in good shape before Covid-19 and early Spring sales, before the shutdown, in New York were strong. In 2008 the crash was due for entirely different reasons, cheap credit, inflated prices, bad loans and over leveraging. That was not the case a couple of months ago. So what should we do now? Will prices plunge? Should we sell, buy or get out of New York?
We shouldn’t panic. For those that are able, now is good time to take stock, spend time with the family and plan for the future. Build a team which includes an attorney, lender, broker. I would certainly like to be a part of that process for you. There is no question in my mind that the real estate market in the short term will take a hit, perhaps by 10-15%. However, for qualified buyers interest rates are lower than ever and just as in 2008 for those who are able, the upcoming months will present a incredible time to buy. As the NY Times recently reported, mortgage applications spiked in March. Brokers have adapted quickly to virtual showings and online closings and I see this as a watershed moment in real estate. Technology will continue to play a far greater role in the way we do business.
The sheer and sudden tragedy of this pandemic has shocked and saddened us all. In a time of suffering and during such a dramatic change to our way of life, there is a tendency for many of us to batten down the hatches and do nothing. That is understandable. I certainly have been able to spend more time with my family than ever before. I’m not sure they appreciate it to the same extent as I do! But I also appreciate all the people who don’t have the option of not working remotely — the delivery guys, healthcare workers and concierges and porters in the buildings I represent. It’s easy to take them for granted and I have been making an effort not to do that.
If there is good news, we are starting to see a few green shoots of hope — weekly listings have started to increase again since the pandemic first hit. With showings down, sellers have been willing to do deals. For the wealthy, parking cash in real estate, as opposed to a bank is a far safer investment during turbulent economic times. That was certainly the motivation for the family who just purchased eight apartments at Waterline Square on the Upper West Side.
I have learned not only in real estate but in life, that the only way to overcome fear and uncertainty is by action and positivity. That might not mean spending money immediately but instead, setting a rock solid plan in place for when things improve. And I’m sure they will.