Editor's note: Below you'll find the week 8 release of the NYC Recovery Index, originally published Sep 14, 2020. Visit the NYC Recovery index homepage for the latest data.
The latest reading of the New York City Recovery Index out of a possible score of 100.
New York City’s economic recovery looks a little different as we are now including real estate transactions as part of our revised methodology tracking the city’s return to normalcy. We have replaced the small business index applications data with pending real estate sales for the first time since we began creating the recovery index. We made this change because real estate is a significant indicator of economic confidence, and a new partnership with StreetEasy has allowed us weekly access to home sales data. We have also decided to retire new DCWP business licenses. While small businesses are an undeniable part of New York’s economy, we found this dataset too inconsistent to continue as a weekly indicator.
Given that change, and the robust recovery in home sales over the past two months, the New York City Recovery Index now stands at 51, more than half way back to pre-pandemic levels. The other metrics we are tracking are still at very depressed levels, but a few are showing some signs of improvement.
Fewer layoffs in August and more restaurant activity also contributed to a rise in the index, but those indicators are still depressed more than six months after the pandemic was declared. Subway usage remains low, but is starting to pick up as public schools begin to reopen. But home sales have rebounded strongly, showing robust demand across select boroughs.
COVID-19 Hospitalizations Continue to Decrease
This key indicator of both our physical and economic health is stable and getting better all the time. New hospitalizations averaged 25 per day in August, down from 31 per day in July. New York City has remained under the 1% infection rate for over one month. That streak will be challenged as public schools partially reopen to students on September 21.
August Unemployment Claims Were Briefly Lower
Unemployment in New York City is still more than double the national average of 8.4%, at a staggering 19.4%. In August, first-time unemployment claims averaged 34,188 per week. That was down from July’s average of 47,727 per week, but still very high.
Weekly layoffs were decreasing until mid-August, but that trend shifted as New York has now seen four straight weeks of increases for first-time unemployment claims. The week ended September 5 recorded 36,944 claims, which is 1,748 more than the prior week and 615% higher than a year ago. Those layoffs continue to be centered mostly in the services industry, which includes restaurants, bars and hotels.
Subway Usage Rises, But MTA Warns of Cuts
Subway usage has been steadily increasing all summer, albeit at a slow pace. That will change next week when New York City public schools partially reopen to students. The massive drop in subway ridership and commuters in and out of the city has taken a huge financial toll on the MTA, and therefore New York City’s revenue. The MTA projects it will have a shortfall in fare and toll revenue of $5.1 billion in 2020, and $3.9 billion in 2021.
If it doesn’t get $12 billion in federal aid, the leader of New York’s Metropolitan Transportation Authority says the agency may be required to cut roughly 7,400 jobs, as well as reduce service on the Metro North and Long Island Rail Road by up to 50%.
Patrick Foye, CEO of the subway, bus and commuter train operator, said in an interview on Bloomberg TV that the U.S. must help the agency given that the state and city of New York are both “broke” and can’t make up for the steep loss in revenue caused by the coronavirus shutdown.
Restaurant Reservations Rise
Good weather and the return of many New Yorkers to the city has meant more restaurant reservations for outdoor dining. 30% of New York's restaurants that are still in business offer outdoor dining, and even though they are operating at heavily reduced capacities, reservations have been ticking higher. That’s particularly good news as Governor Cuomo announced last week that New York restaurants can open for indoor dining at 25% capacity beginning September 30, as long as they abide by health department guidelines.
Real Estate Sales
As mentioned earlier, we are replacing small business applications with pending real estate sales in the NYC Recovery Index. To do this, we have partnered with StreetEasy, New York City’s leading real estate marketplace, which is a subsidiary of Zillow, Inc. StreetEasy has provided us with weekly pending sales numbers for all of New York City as well as borough-specific data for Manhattan, Brooklyn, and Queens going back to the beginning of 2019. They will be providing that data to us on a weekly basis to keep the Index updated.
Sales are marked as pending by an agent when buyers and sellers agree on a price, putting the property into contract. Since closings take a month or more to be officially reported, pending sales offer the best real-time measure of buyer activity.
New York City Pending Sales are Red Hot
Fears of a mass exodus of City residents may have been premature if pending sales are any indication. After bottoming in May, pending sales, or homes under contract, have been steadily rising every week, according to StreetEasy. This is not surprising given record lows for interest rates and mortgages. The average 30-year fixed mortgage rate hit an all-time low of 2.86% last week, spurring home buying across the country.. In New York City, 408 homes went into contract just last week, which was 28% higher than the same period a year ago.
Brooklyn Leads the Way
Brooklyn is leading pending sales for NYC—the borough has seen the largest volume of pending home sales, as well as the most growth of any borough. Last week, pending sales were up 67% from a year ago.
“The surge in buyer activity, particularly in Brooklyn, is a positive sign for New York City’s recovery,” said StreetEasy Economist Nancy Wu. “Many long-time renters have recently turned into buyers, betting the long game on New York City and taking advantage of low mortgage rates. Those buyers are also realizing that they can get more space in Brooklyn—an important amenity to have when putting down roots during a pandemic.”
Manhattan has not seen the same amount of growth, with weekly pending sales now on par with last year. However, the borough is still responsible for the second highest pending sales volume, as 140 homes went into contract just last week.