Newsletter: Coronavirus Edition

Spring 2020 The Burkhardt Group Some thoughts and insights about the NYC real estate market during these unprecedented times! Visit our Website Overview Hello! Hoping of course that everyone is making the best of the present situation we all find ourselves in. While January/February were only a few months ago, marked by a roaring stock market and the busiest start to the new year for The Burkhardt Group since inception, it’s amazing how distant that feels in the whirlwind of the pandemic that we’ve seemingly just started getting to the other side of. I don’t think there is much need to regurgitate the obvious talking points that we’ve all been awash in. That being said, to quickly recap: basically the global economy took a historically massive nosedive, and while we have seen steady stock market gains since late March, we still have a service industry of fragile workers currently experiencing a major trauma (our thoughts and prayers with them all). So, with all that in perspective, what is happening with the current NYC real estate market? For the most part, the ability to buy and sell property has been predictably hamstrung. Physical showings have been stalled, managing agents are working from home; banks, attorneys and title companies are operating remotely. All that being considered, we are continuing with business, even if at a snail's pace for the time being! But as a business defined by a living, social network of agents, buyers and sellers, we have to move forward, we have to stay relevant. Manhattan Snapshot A Rundown on our Current Day to Day Closings: On the new virtual front, we have completed two remote closings with a couple of more scheduled. All in all, they went off without a hitch, albeit with a great deal of extra effort. Our attorneys are telling us that it requires about 5X the amount of time and work to get a closing scheduled and completed. That being said, closing a condo or townhouse is certainly easier than closing a co-op, and being all cash makes things even a bit easier. I'll spare you all the rigmarole we have to go through, but essentially, it entails multiple FedEx mailings along with bank wires, a notary public, FaceTiming with your attorney and arranging a final walk-through (which is typically done with video, Zoom or FaceTime). With all that being said, what has been really terrific is the high level of cooperation between everyone involved in this awkward new dance needed to close a real estate transaction! New Business: We have a handful of offers currently out--and by a handful I mean three-- but all things considered, that's actually quite good! I've also received a number of calls from new buyer clients whom I would describe as having a healthy appetite for opportunity: basically looking for sellers willing to price in a discount based on current circumstances. The problem is, it's going to be months until we have enough deals closed before we can really quantify what that new market bottom will be. While I typically avoid making broad speculations that are not based in any solid quantifiable resource, my general feeling is that depending on the initial pricing and specifics of the apartment, we're probably going to see somewhere between 10-20% discounts. The early buyers will see the best deals, just as we've seen with other market fiascoes. The specific circumstances of this downturn being what they are however, it definitely appears the primary buyer pool in our NYC real estate market doesn't appear to be at risk for significant layoffs. --Layoffs were, however, something that we saw after the 2008 crash: not only did a lot of people actually lose their jobs, the ones who didn't were certainly fearful of future job loss. A pandemic certainly creates its own very specific and unique problems that we have to deal with, particularly in regards to loss of life. However, as horrific as all that is, it certainly could be much worse, and there seems to be a sharp divide between job loss within the service industry versus job preservation for those capable of remote work in partial or total capacity. It's difficult to predict when things will get back to normal or at least some sort of normal, but the overall trajectory seems to be trending towards optimistic, all voices considered. Rates of infection and number of deaths seem to be stabilizing (and even declining in certain areas) and with the development of medications to treat the disease and of course a vaccine to prevent it, we'll get past this! Now I'm not an analyst or an economist, simply a lowly real estate broker, however, I do believe we will see a strong return of the economy once we get this behind us. I can definitely see the bright lights at the end of the tunnel. I think everyone will be going at maximum capacity to get back to where they were pre-coronavirus. I refuse to dwell on the negative, we need to remain positive and know we will pierce through the clouds and see blue skies again. And this isn’t just some dreamy metaphor, it’s an opinion based in history and science. Where do we go from here: We currently have 15 deals in contract and all 15 buyers are focused on closing. I don't want to speak for everyone, but I think it involves a mixture of financial and emotional components. A big part of buying a new home is wanting to get into that special, safe place to be with your family during these difficult times. In some cases people are buying what I would call their dream home or what some have told me is to be their forever home. The Burkhardt Group started just before the financial crash of 2008. After the crash, some, filled with fear and uncertainty, decided to walk away from contract deposits. And, at least from a financial standpoint, that proved to be an incorrect decision in almost all cases. Others have told me this situation re-enforced their desire to hold a portion of their assets in real estate, specifically a home that they will live in and enjoy. Buying a home is the true set-it-and-forget-it investment. Unlike watching my financial portfolio, I'm not googling my zestimate three times a day! Contracts that we had out (6) and ready to sign in March have all been put on hold, with the exception of two that went forward with signing. The others are all taking a wait-and-see approach, and a few clients have already called me to discuss the current market. I feel pretty certain all these buyers will be back either trying to close the deals they started, or perhaps looking for other deals. We have also conducted a few virtual showings through Zoom with clients that continue to look for a new home, pandemic be damned. Even though we're thinking it could be a prudent decision to wait one to two months if you are a buyer, if you did find that dream home now and can get the appropriate discount, I don't see any reason not to move forward with a purchase. I was listening to an interview with Noah Rosenblatt, the CEO and founder of Urbandigs.com, the greatest resource in New York for finding statistical data on sales, price trends, et cetera. He signed a contract on an apartment just after 9/11, and if you go to his YouTube channel/Twitter account, you can listen to the interview. The interview contains a lot of very good insights with lots of important information about what to expect when buying an apartment when there's panic in the streets. Additionally, there is certainly another concern for some of our in-contract buyer clients: the potential destruction of their financial portfolios. The good news is, as I write this, the NASDAQ is only down 5% year-to-date-- absolutely unbelievable. I'm certain that plenty of you, whether buying or not buying real estate, raised some additional cash recently! Closing Remarks and well wishes: I think most people reading this newsletter are probably in pretty good shape, relatively speaking. But my heart really breaks for those that were working in low/moderate paying service jobs that were all but wiped out! People that were living paycheck-to-paycheck, with rent to pay and food that has to be put on the table every night for their families or themselves. Not only am I saying a prayer for these folks every night, we're also trying to give what we can to charities that will assist them get through these difficult times. And of course enough can't be said for all those on the front lines that have continued to work; from delivery people and postal workers, police EMTs and firefighters to sanitation workers along with all the brave medical professionals facing this beast head on! We will get through this, and I truly believe that we will come out a better people, a better country, and a better world, having all gone through this together! I send my love and blessings to all of you, I truly look forward to working with everybody in the near future! Best, Keith 917.770.4951