Preservation of Principal as the Primary Objective with Capital Appreciation as a Secondary Goal
How NYC’s Resiliency in the Face of Catastrophe Sets the Standard for the Golden Rule of Investing
On March 8, 2020, the first death from COVID was reported. By the end of May — not surprisingly — demand* for NYC was down -78% from its pre-pandemic average**.
But on June 1, 2020 the unexpected occurred. Demand began to recover. And, on July 19, 2020, the impossible happened. Demand recovered.
Why do we describe the dates associated with those events as “surprising” and “impossible”? Because the vaccine was but a hope at that point and did not become a reality until December 18, 2020.
Data courtesy of Marketproof & UrbanDigs
As the chart on the following page illustrates, NYC’s elasticity during the pandemic was not limited to demand. Examining the past few years with price/sf lenses, we see that NYC absorbed well the devastating blow of COVID and recovered decisively.
The COVID pandemic has taught us that the NYC residential real estate market can take a devastating blow, only to land softly and stand back up quickly. Sadly, this “news” isn’t news at all. Nor should it come as a surprise. As New Yorkers remember all too well, the attacks on the World Trade center occurred on September 11, 2001. As of year-end 2001, despite the trauma and fear that ensued, Manhattan’s average condo price per square foot had increased nearly +13% over the year prior. And even the Financial District (“FiDi”) which, of course, was the site of the terrible atrocity, had given back less than -11% of the prior year’s price/sf watermark. Over the course of the next seven years, Manhattan average price/sf doubled, while FiDi average price/sf increased by +161%.
The data presented herein memorializes what local, national and international investors have known all along: that NYC residential real estate exhibits one of the highest volatility capacities*** of any asset class. Said more potently, NYC’s residential real estate market has the catastrophe-hedging potential of heavy metals, the appreciation potential of stocks, yet offers what no other asset class can — the ability to enjoy one of the world’s greatest cities.
* Measured by weekly number of contracts signed in Manhattan, Brooklyn & Queens
** The period Jan 5, 2015 to Mar 1, 2020
- ** The ability to withstand volatility without significant movement in price.
-Jason Thomas, Director of Research at Elegran Real Estate
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Our goal is simple: to humanize the world of real estate. Michael Rossi founded Elegran in 2008 on the dual premise of motivation and innovation, with a third sustaining principle added over the years: care. Unique in the industry as an independently owned brokerage with agents known as “advisors” and a data-centered approach, the firm has become a key player in the New York brokerage world. The exclusive NYC member of the invitation-only Forbes Global Properties network, Elegran oversaw well over $500 million in sales volume in 2019, tripled market share in 2020 and sold US $1B in 2021.Headquartered in the center of Manhattan, Elegran is solely dedicated to serving the incomparable needs of the New York City metropolitan region. For more information about Elegran, visit www.elegran.com.