The New York real estate market is currently turbulent. Due to increased prices in the cities, more and more Americans are leaving the metropolises and buying houses in rural areas instead.
Americans are leaving the metropolises
The corona pandemic is causing some changes worldwide and the real estate market is also affected. The US metropolises in particular are currently experiencing major changes, as more and more Americans are turning their backs on cities and moving to rural areas instead. The reason for this is the falling numbers of apartments sold, which have fallen significantly due to the Corona crisis and have resulted in prices coming under more pressure than before. It now seems as if the corona pandemic has significantly accelerated the structural change that had already been announced.
Relocation to the cheaper surrounding area
Metropolises are considered to be particularly fast-paced and this often has an impact on the real estate market in cities. Booms often mean that the prices of apartments and office or commercial real estate in sought-after areas can rise sharply in a short period of time. According to the Handelsblatt, more than 420,000 residents of New York City have turned their backs and moved to rural areas. But it is not only the prices that are likely to contribute to this change; the constant possibility of working from home should also be a strong argument for many to move away from the metropolises. For many previous residents, however, the financial uncertainty triggered by the crisis is the reason to leave the expensive city districts and instead move to the cheaper surrounding areas, where they usually expect a significantly better price-performance ratio.
The virus and the New York real estate market
In addition to all metropolises, the Corona crisis hit the New York real estate market particularly hard – and there seems to be no prospect of a quick recovery. For example, the number of apartment sales in Manhattan in the second quarter fell by a whopping 54 percent compared to the same period last year, while the number of residential property purchase contracts signed in June fell by as much as 76 percent, as the brokerage company Miller Samuel in a recent one Report stated. In particular, the decision not to visit properties in person during the entire second quarter led to this development.
Will it normalize?
According to the broker’s report, the second quarter was generally very weak with only 1,147 transactions. This value was the lowest since the late 1980s. The broker company cites the effects of the corona pandemic, which almost brought life to a standstill in the second quarter, as one of the reasons. Not only did people no longer have the opportunity to visit real estate in person, a particularly large number of rich and otherwise very willing citizens had already left the metropolises by this time. Potential buyers are now hoping for substantial price discounts, although it currently does not look as if this will normalize anytime soon or at all. So it remains to be seen how the real estate market will develop as a result of the Corona crisis.
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