If these past few months have taught us anything it’s that our lives can change in just an instant. In just a few days, we went from working in offices to working from home. Many of us have gone from living a somewhat carefree lifestyle to being terrified to walk outside the door. Our lives have drastically changed whether we got the virus or not. And as much as we may hate to admit it at times, our lives are not likely to go back to pre-COVID “normal”. Especially when it comes to the real estate market.
In all reality, some will lose jobs. Others will find new jobs to replace the ones they’ve lost. As a result, some will decide to move out of the city and into more suburban areas post-COVID-19.
How Real Estate is Being Impacted
Reports have shown that in April, new leases have dropped by 71% compared to the same period last year. In Brooklyn, new leases dropped by 67%, and by 65% in Queens. This goes to show that the number of leases in big cities like New York has been drastically affected by COVID-19.
What will COVID-19 do to Rental Costs and Why?
Rent. Many who once could afford their rent are now unable to do so. This puts both tenants and landlords in an uncomfortable and stressful situation.
Several landlords in the city who were once able to collect from around 85% of their tenants, were only able to collect from 80% of them in April and only 75% in May. While it may not seem like a drastic drop, if this pattern continues post-COVID 19, landlords will have no choice but to either evict their tenants, sign lease agreements with new tenants, or lower rent costs for existing tenants if they can afford to pay the reduced rent.
The Future of Renting
Besides rental properties, there’s a lot more going on in New York City’s real estate market to be aware of. What used to be a booming market has declined rather drastically due to COVID-19. From collecting $217.5 million in tax revenue on the sale of commercial and residential properties in March 2020 to only collecting $78.5 million in tax revenue in April 2020, there’s an apparent drop in real-estate sales. Ultimately, COVID-19 and the inability for real-estate agents to show properties and homes, are the culprits for this drastic drop.
With the decline of taxes from house sales and the decline of rents being paid, there’s a sense of distress among those in cities all across America. How can landlords keep tenants housed if they are unable to pay rent? How can landlords continue to pay their mortgages without being paid from their tenants?
The real estate market, the landlords, the tenants, and the government are all being impacted by COVID-19. All of these parties are part of a cyclical cycle wherein one affects the other.
If government aid is lacking, how will renters and landlords stay afloat? Do you have suggestions on how to bring our cities and business “back to a new normal?” Give us your comments below.
Michele Christine Weinstein is a motivational writer, content creator, freelance writer, and entrepreneur who utilizes her life story and pre-medical background to inspire others. She believes in the power of our stories and encourages all to share their stories of struggle on a platform that she founded called Not a Standard. Outside of work, Michele enjoys kayaking, walking her dog, and working out. She also enjoys a good home-decor project, although it usually results in bloopers (which she later shares on social media for good laughs and instructions!). She’s always sharing her projects, bloopers, and little motivational quotes (which she calls Michele-isms) on Instagram, so check her out. And stay tuned for what her story entails next. It may just be great.