Co-op boards might consider revisiting their sublet policies in light of two accelerating trends: as the coronavirus pandemic continues to drive New Yorkers out of the city, the soft real estate market makes it increasingly difficult for them to sell their apartments. Subletting might be a lifeline.
The Real Estate Board of New York (REBNY) reports that the city’s total residential sales volume and total residential transactions plunged during the second quarter of this year, reaching their lowest points since REBNY started reporting in 2006. According to the group’s new Quarterly Residential Sales Report, citywide total residential sales volume decreased 50% from April 1 to June 30 of this year, compared with last year – falling from $12.8 billion to $6.4 billion. Every borough, with the exception of Staten Island, experienced declines in total sales volume.
Citywide residential transactions decreased 43% year-over-year, from 11,413 to 6,534 sales, with all five boroughs seeing a decrease in the number of transactions. Prices took a hit, too. The average sales price of a home in New York City in the second quarter of 2020 was $975,806, a 13% decline year-over-year.
“This dramatic decline is an SOS to federal, state and city officials,” says REBNY President James Whelan. “As we look to restart New York’s economic engine, it’s essential we receive federal aid and focus on smart policies that create jobs and encourage private sector investment that will generate critically needed tax revenue.”
The day Whelan made his remarks, the U.S. Senate voted down a reduced Republican coronavirus relief bill, with Democrats saying it failed to address Americans’ needs. The vote virtually ensures that no additional relief will be coming from Washington before the November election.
Citywide, condominium transactions declined 57% to 1,248 units; cooperative transactions declined 60% to 1,321 units; and one-to-three family home transactions declined 24% to 3,965 units. Manhattan showed the largest year-over-year decline of all five boroughs in both total sales volume and transaction volumes, at 66% and 62% respectively.
The real estate industry represented more than half (53%) of the city’s total annual tax revenue in the last fiscal year. Declining tax revenues are already affecting city services. In a scathing letter, more than 150 business leaders have warned Mayor Bill de Blasio that he needed to take more decisive action to address crime and other quality-of-life issues, The New York Times reports. The business leaders claim those problems are jeopardizing the city’s economic recovery.
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