Worth recently spoke with Douglas Elliman’s breakout broker Jessica Levine to get a timeline of the city’s real estate collapse, its rebound and what comes next.
Photo courtesy of Berenice Melis via Unsplash
While New York City was in the throes of the coronavirus pandemic, Douglas Elliman agent Jessica Levine (pictured below) was already assessing the fallout. As one of Elliman’s top brokers by transaction volume and gross commission income, overseeing her own imprint within the global real estate firm, Levine’s rolodex of high net worth clients suddenly put their real estate searches on hold, with some migrating to Miami and the Hamptons.
“Although New York was thought to be recession-proof during the past financial crisis, this time felt different. All the things that make Manhattan an international power hub like its art, culture and restaurant scenes were suddenly shut down,” recalls Levine. “But our motto was ‘Never Bet Against New York.’ Every day we channeled this energy, and it paid off big.”
Although brokers weren’t allowed to show properties until June 2020, Levine used the time to strengthen her relationships with clients and ensure communication pathways were open. When New York started reopening, and the ultra-wealthy realized the downside of living in Florida is that you have to live in Florida, she was their first call. The broker’s official imprint within Elliman, The Jessica Levine Team, launched right as the market reopened, and business has remained at breakneck speed ever since.
The new cliché is that New York is back. High net worth individuals and families are FOMOing back to Manhattan in droves, competing against one another in bidding wars that have become more ruthless than those in Southampton at the height of the pandemic. But the city’s real estate market has undergone both tremendous turmoil and triumph throughout the pandemic. Worth recently spoke with Douglas Elliman’s breakout broker to get a timeline of the city’s real estate collapse, its rebound and what comes next.
Q: What did the New York City real estate landscape look like before COVID?
A: From 2016 until the start of 2020, the market was showing signs of softening. A new political administration mixed with a strong dollar made it more expensive to invest in NYC for many foreigners. Without foreign money, as well as the newly capped SALT deductions Trump imposed, the market did lag for a few years. Many correlate a strong stock market with a strong economy and therefore a strong housing market, but this is not always the case. When the market dips by 5 percent, investors are wary and buyers fret. When the stock market is surging, everyone feels confident. So, the stock market was going up, but real estate was flattening and trending down.
By the start of 2020, with the stock market high and economy strong—despite being an election year, which can often equate to a volatile year in real estate—buyers felt confident, and prices were just starting to pick up again. Although the first quarter of 2020 was strong, COVID hit NYC hard in March 2020. On March 23, [Gov. Andrew] Cuomo declared brokers “non-essential,” and it was suddenly a violation to show an apartment in person.
Now that the pandemic seems to be winding down as the city doubles down on vaccination efforts, what does the market look like?
When brokers were declared essential in June and allowed to work again, the market opened in an absolute buying frenzy. Buyers were looking for deals, sellers were panicked and offloading properties, and there was an all-time high rental vacancy.
I often give an analogy that correlates to stocks. When the stock market crashes, some sectors and stocks rebound quicker than others. I like to compare each individual neighborhood to a sector in the market. Technology sectors in the market remained strong, while travel sectors plummeted. While this is a subjective opinion, areas like Midtown and the Financial District, which are close to a large portion of office space, are like the travel sectors and are struggling more than areas like TriBeCa and Flatiron, which are like the tech sectors and prices didn’t dip as much.
Further adding to this correlation, even in a strong or weak sector, you can still have a stock which is an outlier, for better or worse. Some buildings in desirable neighborhoods are still struggling due to high HOA fees or taxes, or pending litigation or assessments. Many of my clients will understand the analogy of looking to buy the “Apple stock of real estate buildings,” and regardless of whether or not they follow the market, they understand this means a building that holds its value and has strong upside or ability to weather a storm.
Where are the frenzies?
Everywhere, especially the Upper East Side along the 2nd Avenue subway line…and downtown as retail moves back in. The Financial District and Midtown West still struggle. Brooklyn opened strong and remained strong, partially due to the townhouse market.
Do you have any tips or advice for buyers?
Understand the work and make sure you have a buyer’s broker who’s going to help you and who you trust because anyone can go online and look at properties. You want someone who works with you and says, “here are the flaws and challenges with this apartment” or “this is listed correctly and will have less negotiability so be ready to pay ask if you want this.”
What most buyers want is a buyer’s broker who is honest, can educate them and handle negotiations strategically. You don’t want to win the negotiation but lose the apartment.
Good real estate brokers don’t just open a door and show an apartment: They understand where value is and how to provide as much of it as possible to their clients.
I pride myself and my team in telling our clients, whether it be a buyer, a seller or an investor, that when you hire us, you get us. My team is extremely knowledgeable about all the intricacies of NYC real estate, including contract law, 1031 exchanges, financial statements and knowing buildings’ past histories, as well as the rental market. We like to reference ourselves as “knowledge brokers.”
Do you think some businesses staying remote will impact buyers’ decisions?
Right now, enough people want to come back to New York, and it doesn’t matter if you’re remote. If your friends are back, you want to be back. At this point, the city is coming back stronger than before.
What are your predictions for the future?
I think we’re going to see a lot more movement. A lot of New Yorkers are coming back with restaurants opening, jobs reopening—as well as a lot of new restaurants! Outdoor dining is here to stay, with streets closed off to accommodate seating. That never was common before COVID. So, you have a lot of people coming back and sitting outside feeling like they’re in Europe. There has been a complete revamping, and I think we’ll see different areas rebound stronger.