Our findings are that NYC apartment prices are roughly down 30% for the past year. In regards to Co-ops, they make up about 80% of Manhattan real estate. It's important to note that Co-ops require 20% cash down, while condos only require 5%-10% cash down. Interestingly enough, 95% of Co-op purchases are restricted only to primary residence owner occupants plus additional financial restrictions set up on a case by case basis for each individual building and roughly half do not even all the owners to rent the property out.
In short, investors don't purchase co-ops. Conversely, investors tend to purchase condos, as condos do not have the same restrictions as co-ops.
Historically speaking, in 2019, co-ops went for about $1,300 per square foot and in 2020 they went for about $2,000 per square foot. As one can see, rent historically went through the roof.
Currently, rent in Manhattan is through the floor, and every incentive you could ever imagine is being thrown at any renter coming through the door with a little bit of cash in hand.
The investors who were depending on rent to cover the monthly debt service are now selling. Similarly, everybody who purchase property about a decade ago, made a substantial amount of capital. Those individuals are currently selling their studio condos via a 1031 exchange tax free, and moving out to the sub-burbs (similar to the 1950's).
Unfortunately, many individuals are speculating in the stock marketing trying to purchase NIO or TSLA (Note we don't hold any holdings in these securities), while scrolling through Netflix and waiting for this pandemic to end.
The coronavirus will last likely another year, and right now is similar to 9/11 in downtime Manhattan when nobody wanted to live there. A few years after 9/11, several properties skyrocketed 300%+. In the next 24 months, we do expect about a 234% return in Manhattan real estate.
Even better, if you have an opposing view please comment, and we can have an interesting discussion.