A year ago, New York looked like a much different place. There were construction and development everywhere, with a sidewalk shed on seemingly every block indicating the work going on. There were cranes and new buildings going up, restaurants were thriving, and Broadway was filled with award-winning shows. 

Then, coronavirus hit the city hard in March, and all that changed. 

For the past year, the city has been incredibly quiet, and much of what it is known for has gone dark. 

While some residents have fled for places like Florida, others have weathered the storm, but regardless the real estate market in the city has suffered tremendously. 

Some hope that with the coronavirus vaccines now released, 2021 will be a year of recovery in many ways, but what will the New York real estate landscape look like?

A City Struggling

The real estate market is only going to be able to recover when the city truly starts to recover. It’s going to be tough. The jobless rate in the city is more than 12%, which is almost double the national average. Many companies don’t expect staff to ever return to their offices, and around 300,000 people have left the city since the pandemic started, depleting the tax base. 

New York leaders have talked about increasing taxes and reducing some services, but so far, there aren’t any concrete plans to make up for budgetary shortfalls. 

These are issues that, even with a vaccine, are going to have to be addressed before the real estate market can really start to recover. 

Most analysts expect recovery will be a rockier and perhaps longer road for New York City than most other places in the country. 

The Rental Market

The rental market has suffered quite a bit. Many of the industries that support the city’s residents, including tourism and hospitality, are completely shut down. In October, median asking rents in Manhattan dropped to $2,880, which is the lowest level since 2010. 

Until jobs, including in the hardest-hit sectors, return, it’s going to be difficult for landlords to see increased rental demand. 

Rental inventory is also at record highs, with a 123% increase citywide in October. 

Until there are more renters coming back into the city than there is inventory on the market, again, this will remain a problem. 

A Tale of Two Cities

As is almost always the case, the pandemic has continued to cement New York as a true tale of two cities. The outer-borough residents and lower-wage workers have been the most affected by coronavirus and its ripple effects. You can see the economic devastation in entire neighborhoods. 

However, higher-income workers are maintaining if not doing better than they were before because 2020 was a big year for tech stocks. 

Sales of homes that cost more than $4 million have actually been above what they were in 2019. 

Some of New York’s wealthier residents and transplants are betting on the long-term recovery of New York and they’re using the downturn as a buying opportunity. However, there’s even uncertainty in this segment of the market because there’s a proposed pied-a-terre tax that could be in the pipeline. 

Will Brooklyn Be the Place to Be?

An estimated 22% of New Yorkers said they were leaving last year, but they had plans to return. Some real estate experts and analysts expect Brooklyn to see most of these returning residents. 

Before the pandemic, the Brooklyn market was hot, and now there are reduced rental prices and the borough is seeing all-time inventory highs. Plus, the features that Brooklyn can offer renters and even buyers that other parts of the city can’t, could be very important in a post-pandemic world. 

For example, in Brooklyn, renters and buyers might get in-unit laundry, outdoor space, and easier access to public green spaces. 

A lot of people changed how they wanted to live because of COVID. They wanted more space, as they were working from home and educating their kids at home. When you don’t have the theater, museums, and restaurants, having more inside and outside space becomes critical, and that may be a trend that continues to be relevant in the New York market. 

Overall, while it’s going to be a rough road, New York and its residents are resilient. Rather than looking at the market as down, some people are choosing to look at the city as offering some opportunities right now, at least for buyers.