There's a Manhattan Bound B(uyers) Train Arriving in 17 Days
I’m going to keep this simple. No quarterly, monthly or weekly summaries for the Manhattan real estate market. No year over year comparisons. No broad brush conclusions or prognostications about the future. Frankly, I feel most buyers and sellers find little strategic guidance after attempting to digest all of the information being promulgated by the brokerage community. Especially when it comes to making a buying decision in Manhattan with its many micro-markets, succumbing to broad market data conclusions can lead to less than sound decision-making. As I’ve stated before, at the end of the day, a specific property will sell for what a qualified buyer is willing to pay for it at a given time.
What does clearly and directly affect a buyer’s endgame is supply and demand. We hear much about the forces of supply and demand and their related impacts on various financial markets. At the forefront of the media coverage is the impact of supply and demand on the housing market. A basic tenet provides the assurance that the price of real estate will eventually (or as more recently observed in many New York City Metro submarkets, quickly) rise in response to increasing demand if supply remains the same or diminishes. Well the demand which includes pent up demand - still emotionally charged with COVID-19 related considerations - is back. The streets in Manhattan are busy. Offices are opening, prominent corporations are expanding their footprints, Broadway lights are coming up, schools are open, and tourists are returning. And another thing is about to change.
An Executive Summary released by Alston & Bird notes that “after more than a year of various travel bans, the Biden Administration announced a uniform policy for air travel from certain countries and another for land crossings.” Beginning November 8, 2021, travel restrictions for international travelers coming into the United States will be lifted for persons who are fully vaccinated and can present evidence of a negative COVID-19 test taken three or less days before entering the United States.
What does this mean? Previously banned travelers from Brazil, China, India, Iran, Ireland, South Africa, the United Kingdom, and the Schengen Area will now be eligible to travel to the United States if they meet prescribed criteria for entry. The Schengen Area, different from the politically and economically aligned European Union (EU) with 28 member states, includes 26 countries that recognize a visa-free zone and allow member states citizens free and unrestricted movement across the borders of participating countries. In addition, previously imposed entry restrictions related to nonessential travel from Canada and Mexico will also be withdrawn. Beginning November 8th, fully vaccinated neighbors of the contiguous United States may participate in travel to the United States for nonessential reasons, too.
Here’s the takeaway. Domestic buyers have been largely responsible for the noteworthy sales activity of the last two quarters. Now, get ready to add foreign buyers to the mix. Foreign buyers, many of which had to put their investment plans on hold for the past 20 months, are coming and they’re bringing cash. No guarantees, but all things being equal, this influx of new buyers may result in a price escalation scenario for in-demand and under-built and/or unavailable residential options. Many of these buyers will have an affinity for new or recently developed properties. So if you want to get into the market or you’re on the fence regarding a particular purchase opportunity - especially in the “well-executed and well-managed new development” category - you may want to negotiate favorable terms and strike now before the field of potential buyers expands. Or, if you subscribe to more of a Buffettology analysis and prefer to go in the opposite direction of the crowd, you can wait it out and see where the dust settles. Just remember, we’re talking about where and how we want to live. And at some point, we need to move on with the living part.