New York City Real Estate Sale Price Changes at the Height of the COVID-19 Pandemic

By: Jonathan J. Gonzalez

Overview

I set out to understand how real estate sales prices in New York City have changed throughout 2020 as the COVID-19 pandemic shut down offices, schools, and businesses throughout the city. In a place like New York City where, thanks to a relatively high density — a result of the appeal of the city’s economic activity including many amenities such as restaurants, theaters, museums, etc. and the presence of finance and marketing hubs, among others, that attract employees and customers — apartments and homes are relatively smaller than nearby municipalities. With that in mind, and as people have been forced people to retreat to their homes to carry out all of their normal activities, I wanted to understand how New York’s real estate sales prices reacted to folks’ need to spend more time at home in the midst of the pandemic. My goal was to understand if New York’s real estate market is reflecting a decreased interest in folks planting their roots here for the long-run. Assuming that real estate sales prices serve as a reasonable reflection of folks’ interest in living in New York City, I used the NYC Department of Finance’s Rolling Sales Data to glean insight into how individuals’ interest in living in New York has changed from January 2020 to August of 2020 (the latest point at which sales data is available).

I conducted my analysis within this RStudio project.

Research Questions

Since New York City’s social distancing mandates largely went into effect in March 2020, I wanted to use real estate sales prices from a few months prior to that moment to capture market prices prior to when social distancing measures may have impacted buyers’ decisions. Along the same lines, I wanted to capture market prices with social distancing measures in place, and the city operating under a “new normal”. That said, I asked the following question:

How have 2020 property sales prices changed in New York City from the months of January to August?

Additionally, I wanted to understand how changes in the real estate market might have varied across the city’s five boroughs. This would help me understand which areas might have experienced the greatest impact as it relates to peoples’ interest in living there. With that in mind, I also asked:

How have 2020 property sales prices changed in each of New York City’s five boroughs (Manhattan, Bronx, Brooklyn, Queens, and Staten Island)?

Findings

How have 2020 property sales prices changed in New York City from the months of January to August?

As depicted in the chart below, New York City’s Department of Finance Rolling Sales Data revealed that New York City’s median property sale price in January 2020 was $465,000 and dropped to $390,000 by August 2020. This reflects a significant 16% drop in median property sale price within the observed period.

How have 2020 property sales prices changed in each of New York City’s five boroughs (Manhattan, Bronx, Brooklyn, Queens, and Staten Island)?

As evidenced in the chart below, when disaggregated, the data revealed interesting changes over the observed period. Manhattan, the city’s central borough with significantly higher median prices, actually saw an increase in median property sale prices — from $735,000 to $757,500, an increase of 3%. This is fairly surprising given that Manhattan’s real estate market tends to offer smaller, centrally-located properties that make social distancing more difficult.

The rest of the city’s boroughs saw median property sale prices decrease, consistent with the changes observed at the city level. Staten Island saw the smallest decrease, from $417,750 to $405,000, a decrease of 3%. Next was the Bronx, with a 7% drop, from $310,000 to $287,000. Queens saw a larger drop of 17%, from $407,821 to $336,600. The largest drop in median property sale price was experienced by Brooklyn, where sale prices fell by almost half, at 47%, from $480,000 to $253,500.

Reflections

It is worth noting that, by virtue of conducting my analysis on property sales data, my analysis naturally misses sales that didn’t occur. This means that the data and corresponding analysis does not capture the value of properties available for sale or the assessed value of existing properties not for sale. Thus, the data may only capture a portion of the real estate market that reflects instances when owners were willing to conduct sales during the observed time period. So if it has been the case that property owners have chosen to hold on to their properties until social distancing requirements and the effects of the pandemic subside, then the transactions observed do not capture a more wholistic picture of the assessed value of properties in New York City (and the implied effects to the New York City real estate market), instead only capturing properties with owners who were willing to sell during this period. The assessed data could reflect scenarios in which the property sale prices would only be marginally affected by unexpected shocks like a pandemic, such as with the sale of blight that is already minimally valued. To account for this, future analyses should incorporate an assessment of how many sales were foregone during this period by evaluating how many real estate listings were created then removed without a reported sale during the observed period. This future analysis should be sure to account for the financial value of those foregone sales as well.