Buyers looking for a “Covid discount” on a New York condo may be disappointed.
Concessions may be on the table, and some sponsors are guaranteeing satisfaction for buyers who only viewed their unit virtually. But fire-sale prices? Not so much.
“There is a lot of talk about, ‘What is this Covid discount?’” said Kelly Kennedy Mack, CEO of Corcoran Sunshine Marketing Group. That has “certainly created a pause for some people who aren’t quite sure where the price is or where it will be, but the truth is no one really knows. It’s nuanced in every building.”
Mack weighed in during a recent installment of TRD Talks, along with Douglas Elliman’s Susan de França and Stephen Kliegerman of Terra Development Marketing, the new-development arm of Brown Harris Stevens and Halstead.
Since Gov. Andrew Cuomo shut down non-essential businesses in mid-March, the three said their firms — and the entire industry — pivoted to virtual tours and presentations. De Franca said virtual open houses are now available throughout Elliman’s portfolio.
All three said business slowed to a trickle during the pandemic. Since Covid hit, Kliegerman said, Terra has gotten 1,100 requests for information and closed 78 units. It has 22 signed contracts, 34 contracts out and 53 new offers.
To accommodate buyers who have only seen properties virtually, Kliegerman said some clients are offering “satisfaction guarantees.” Buyers have five days to visit a sales office once reopening happens. “If they’re not happy for some reason, they can get out of the deal with no penalties,” he said.
Mack said most deals that closed were under $3 million. “Things are slower, but there’s action and interest out there,” she said.
During the shutdown, the number of contracts dropped, according to a new report from Douglas Elliman and appraiser Jonathan Miller. In Manhattan they plunged 80 percent for co-ops and 83 percent for condos in May from the same month a year ago.
The report did not cover prices, but the trio agreed that most developers lowered their prices by between 5 percent and 10 percent before the pandemic as inventory piled up.
“So we have not realized significant price reductions across the portfolio,” De França said.
“If you had to answer, the Covid discount to date has only proven to be 4 percent,” Mack said, offering ballpark figures. “It’s far from the 20-something that some people expect when they walk in.”
Bulk condo deals aside, units are not selling at bargain prices. “The inquiries are coming in, but the deals aren’t happening because the deals aren’t there,” Kliegerman said. The value of some of the best units simply doesn’t warrant massive discounts, de França added.
Mack called the prices a “smart ask,” reflecting the strength of the New York market despite reports of residents fleeing for the suburbs. “We’re going through a global pandemic unlike anything anyone could have imagined. We’re not going to recover as a city overnight,” she said.
One concern is the impact of retail shutting down. If stores like local dry cleaning and stationary stores are closed, the inconvenience would affect residents, some of whom may look to move out of town, at least temporarily. More than 400,000 have fled during the pandemic.
But de França said although New York City might feel pain for several months, “if you have the staying power, it always bounces back.”