The NYC Real Estate Market is in a state of disarray. Rents are in freefall. The residential vacancy rate is at an all-time high of nearly 5%. Contract activity (i.e. sales and leases) is at a low, but recovering slowly. Investor uncertainty abounds, placing pressure on the seller side of the market. “Uncertainty is something every market hates … I think we all expect a sort of slow, measured recovery,” says Greg Heym, Chief Economist at Brown Harris Stevens and member of New York City Mayor’s Economic Advisory Panel.  That slow, measured recovery will require real estate and development firms — as well as small commercial and residential landlords — to adapt to their clientele’s new reality.
In this new reality, however, there are promising things in store for both sellers and buyers. First and foremost, the widespread dissemination of the vaccine will likely bring about a spur of commercial activity. This is so for the simple reason that COVID’s continued presence is the strongest perpetuator of investor uncertainty. With it gone, capable buyers will likely jump on what are bound to be sub-market rate opportunities, as hard-hit real estate and development firms struggle to fill lost revenue quickly. Firms and investors are also waiting for the job market to stabilize, for small businesses to recover, and for NYC tenants to return en masse.
With the Federal Reserve committing to keep interest rates near zero until 2023 and the stimulus package in full effect, converging consumer benefits will likely prompt a consumer led recovery for the NYC real estate market. With respect to seller benefits, struggling real estate and development firms should lean on federal and state aid distributions like PPP and ERTC, apply for loans and grants, and claim newly-approved deductibles whenever possible. 
On that note, it is clear that the real estate market’s eyes will be on the government this year, as a seemingly unprecedented amount of legislation complicates contract activity and sustained residence. Whether looking to sell or rent new (or, in the likelier case, newly vacant) properties, sellers must keep a close eye on changing state and federal regulations, some of which we have covered in detail on our blog.
One key example is the pied-a-terre tax, poised to be voted upon this year. That tax applies to part-time homeowners who have homes with market values above $5 million and co-ops and condos with value assessments over $300,000.  Detractors claim that the new tax will drive wealthy taxpayers out of NYC, slowing investment and maintaining the already high vacancy rate. Supporters claim that it will bring in desperately needed revenue, filling a budget gap by closing a wealth gap. The tax is estimated to generate an additional $400 million in revenue. If approved, the tax would raise property taxes on qualifying owners; and, with the new Democratic senate majority, it is likely that it will indeed pass.
The fact that “[m]uch of the city’s excess inventory is high-priced, new development condominium units,” indicates much about where the 2021 market will head.  On the one hand, it highlights the need for high-income residential tenants and lends credence to the concerns regarding the pied-a-terre tax. On the other hand, it is likely that these condos will go for significantly lower than the market rate, supporting the notion that 2021 will certainly offer a buyer’s market. Real estate and development firms are suffering in their new reality, and banks are threatening foreclosures. Because of this, larger firms are going to have to return the negotiation table with better deals for buyers if they want to stay afloat, as many small landlords were forced to do last year.
 – Hudson, Erin, “What will make or break New York’s residential market in 2021,” The Real Deal, 5 Jan. 2021, https://therealdeal.com/2021/01/05/what-will-make-or-break-new-yorks-residential-market-in-2021/?utm_source=internal&utm_medium=widget&utm_campaign=feature_posts, accessed 6 Jan. 2021.
 – ibid.
 – TRD Staff, “State pols make pied-a-terre tax a priority for 2021,” The Real Deal, 7 Dec. 2020, https://therealdeal.com/2020/12/07/state-pols-make-pied-a-terre-tax-a-priority-for-2021/, accessed 6 Jan. 2021.
 – Op. Cit. n1.