New York Real Estate Center, the leading platform for virtual continuing education courses, featured the industry’s top leaders on March 3, 2021 for a lively discussion on the state of NYC’s new development sales, buyer and project financing, and valuation and real estate technology.
Hosted by Nick Malfitano of Titlevest and moderated by radio personality and real estate professional Vince Rocco, the panel of acclaimed experts included Heather McDonough-Domi, founding partner of the H + H Real Estate Team at Compass, Tara King-Brown, Licensed Associate Real Estate Broker at The Corcoran Group, Michael Vargas, Principal and Co-Founder of Vanderbilt Appraisal, Melissa Cohn, the Executive Mortgage Banker at William Raveis Mortgage, Orest Tomaselli, President and CEO of National Condo Advisors, Kael Goodman, founder of Marketproof, and Scott van der Marck, a Senior Managing Director and Relationship Manager at First Republic Bank.
“While the New York City marketplace is still struggling from the effects of COVID, we’ve seen immense improvement from positive vaccine news and rollout that has increased buyer confidence,” said Mr. Rocco.
The panel discussed increasing inventory since 2017, which has resulted in more than 15,000 new development units in New York City, with over 8,000 of them being in Manhattan alone. The panel pointed out that though demand is picking up rapidly, more than 40 billion dollars worth of unsold property in New York City remains.
“This is going to be a long road to recovery. We’re on our way, with the market beginning to meet absorption levels and increasing demand,” said Mr. Vargas. “We will see that the road will be different for price points and developments within Manhattan.”
With New Yorkers having resorted to markets like Miami or the Hamptons this past year, expectations were set high for discounted pricing. However, the discounts that people are generally expecting are not there, yet. The Manhattan market is currently seeing about 7-10% discounts.
“The rest of the country has had a housing boom. New York will not be left out of this, but we are going to see the same phenomenon post-COVID,” said Ms. McDonough-Domi. “It’s going to be a delayed reaction, with the volume and pace continuing throughout the next few years.”
Panelists discussed the current nuances of the Manhattan market. Whereas neighborhoods used to be a main selling point, smaller listing details have taken center stage.
“Transportation has changed how neighborhoods aren’t the driving factor anymore,” said Mr. Malfitano. “Everything is accessible, so it takes more to bring buyers in than just the neighborhood itself now.”
Ms. King-Brown spoke about the difference in value versus price in the current market. She shared that the luxury market is being driven by turn-key, move-in ready listings with buyers prioritizing their value.
“It’s very nuanced in Manhattan right now. Block by block, neighborhood by neighborhood, it is important to look at it in a very nuanced fashion,” said Ms. King-Brown. “My team has seen an incredible demand for big, three-bedrooms with open light because they’re craving the utility out of the apartment they need.”
The panel highlighted that new developments, in particular, struggled this past year with about 40% of the projects remaining unsold. As a result, some lenders have chosen to stay away from new developments until that number rises above 50%.
“Lenders are being incredibly cautious in this market,” said Mr. Tomaselli. “We’re driven by the availability of mortgage finance, which is down right now.”
“With mortgage rates steadily increasing, we will see a big boom to the new condo market in time,” said Ms. Cohn. “We have seen a switch where banks today will now take all bona fide contracts into consideration.”
“Were at a moment in time when valuations are lower than they’ve been in a while. Banks should feel safer about lending in at a higher leverage,” remarked Mr. van der Marck.
The panel also discussed pied-a-terre taxes and the implications it would cause on the city of Manhattan.
“Pied-a-terre tax will be devastating to our city,” shared Mr. Goodman. “Another tax will clearly have a detrimental effect. It will drive necessary and important taxpayers out of the city.”
Agreeing with Mr. Goodman’s comment, Ms. King-Brown added, “The goal is to raise revenue for the city and the state, but it is going to be a net loss for both with this tax. We are driving away the people we need as a tax base.”
New York Real Estate Center is a dynamic platform that serves as a resource for the residential and commercial real estate community. Subscribers have access to a full catalog of courses and information taught by leading real estate professionals, including Michael J. Romer and Pierre E. Debbas, managing partners of Romer Debbas, LLP and principals of New York Real Estate Center. The innovative courses offered through New York Real Estate Center satisfy state real estate agent and broker licensing requirements.
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