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I was on the hunt for a NYC apartment when the coronavirus crisis hit. It seems like an even better time to buy now, given seller anxiety and low interest rates. Will I be able to find a place?
It all depends on your tolerance for risk, as daily life in New York City, one of the hardest-hit areas for Covid-19, has come to a standstill in an effort to halt the spread of the pandemic, and the economy is veering toward a recession, our experts say. Pursuing a real estate deal right now will be extremely challenging.
Open houses are now banned in New York State, and move ins are not permitted in many buildings. And buildings in NYC have shut down amenities and non-essential repairs in order to protect their residents. Some deals are being postponed, while others are going virtual, with buyers and sellers closing sales through their attorneys and co-op boards doing interviews over Skype.
"More and more buildings are restricting entry and exit for outside personnel, including move-ins and move-outs, prohibiting renovations, and are of course concerned with the obvious challenges related to public and private showings," says Jeremy Kamm, an agent at Warburg Realty. "Everything is still so very new and heightened, and people are still just trying to adjust to the changes in their day to day lives."
All this can certainly slow down a deal. And buyers must also consider the financial risk of making a major purchase right now, given that fears of a recession are on the rise.
At the same time, there are compelling reasons to buy now.
"Between locating a property of interest, submitting, and negotiating an offer, completing due diligence and signing a contract, and then securing loan and co-op or condo approval, the process can easily take three to six months or longer," says Ari Harkov, a broker with Halstead. "By the time you are ready to close the world will hopefully have returned to some degree of normalcy."
Buyers may also find that this is an opportunity for discounts, as those who need to sell feel an increased sense of urgency as deals slow down and dry up.
"I anticipate there will be a small number of sellers who will be highly motivated to accept below-market offers in the near term. These opportunities may subside after those sellers who need to sell initially find buyers and many others choose to wait for the market to stabilize," Harkov says.
In making your decision, you should consider whether you have the financial resources to stay afloat through a period of economic instability and uncertainty. Also, think about how long you plan to live in the apartment.
"A longer ownership time horizon is always helpful to having the confidence to buy," says Deanna Kory, a broker with Corcoran. "One of my clients bought right after 9/11 and the value of their place has since doubled. Not every crisis is the same nor is the length of time to recovery, but if you need a home you can likely get a better price, lock in a great interest rate, and enjoy your home or investment for many years to come."
If you're at the very beginning of your search, you likely won't be able to visit many apartments in person. But you could use this time instead to familiarize yourself with the market, decide upon your criteria for a home, figure out your budget, and otherwise ready yourself for a purchase. You could also speak to a mortgage lender.
"If you decide to delay your home search, my recommendation would be to lock in these low mortgage rates and then you can hit the ground running when you are ready," says Mihal Gartenberg an agent at Warburg Realty. "Speak with your real estate agent for a mortgage recommendation. It’s the next best thing to buying now."
Remember that this is temporary, and when life returns to normal, buyers and sellers will want to jump back into their plans that were postponed.
"Listings that have gone off market will return, and once the dust has settled a bit we will start to see a flurry of new inventory as sellers become anxious to list property they were already prepared to sell," Kamm says. "What savvy buyers should be doing is relying on the support of their brokers to guide them through this difficult time, use their spare time to conduct their own research, and be prepared to jump as soon as the time is right."
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