New Yorkers reckon with the suburbs. And agents rejoice
Sales surge as city residents flee to the tri-state
Most know it as “Greenwich.” But to Danielle Malloy, it’s become “Manhattan North.”
The managing broker for Nest Seekers International in Connecticut has seen so many families moving into the area, first as renters, then buying secondary homes, then moving into primary residences, that it’s transforming the market.
“It was surprising to everyone,” Malloy said. “Now every broker I know, we’re busier than ever right now.”
As the pandemic continues, New Yorkers who fled the city are coming to a new realization: maybe they actually like the suburbs after all.
And it’s not just Connecticut. Across the tri-state area, short-term renters are becoming long-term buyers as residents are allowed to work from home and families seek private amenities to ride out waves of the coronavirus pandemic.
At the beginning of the pandemic, real estate agents were forced to scramble. As offices closed and buyers and sellers stood in the face of uncertainty, sales plummeted.
For Signature Premier Properties, which does business in Nassau and Suffolk counties, the number of homes under contract in April dropped nearly 66 percent year-over-year. The number of homes sold similarly decreased 33 percent compared to the year before. And May was even worse, at a 50 percent decrease in contracts.
“It’s still an industry where you have to see it, feel it, touch it,” said Kathy Viard, the co-owner of Signature Premier Properties. “In the beginning of Covid, when we didn’t really know what was going on, everything was virtual.”
But when Long Island entered Phase II in mid-June, allowing for in-person showings, everything changed. Homes under contract jumped 15 percent compared to last year. So did the average under contract price, increasing almost 15 percent to $683,492.
June was the best single month of Signature Premier Properties’ 12 years in business.
“June and July are going to be record months, and then we’ll know for sure whether most of this is pent up demand or an influx from the city and the boroughs,” said Peter Morris, co-owner of Signature Premier Properties.
No real estate market in the U.S. was battered more by the Great Recession than Connecticut.
By the end of 2019, most home values in the state were down 20 percent from the pre-Recession peak, according to Zillow. At the beginning of the year, Connecticut had only recovered about 85 percent of the 120,000 jobs it lost during the last recession.
Nonetheless, 2020 started off strong. Sales of single-family homes were up 6.1 percent in January and February, and the median price was up 8.7 percent, according to the Warren Group.
Though the early stages of the pandemic caused a drop in closings, there was an immediate increase in rentals, according to Susan Cassidy, the branch vice president of Coldwell Banker’s Greenwich offices.
Cassidy said buyers from the city were especially interested in backcountry properties, which had been languishing in recent years. Nearly a third of homes that went under contract between March and early July had a pool, she said. And nearly 10 percent had three or more acres.
“The buyer six months ago did not want to deal with maintaining anything more than they absolutely had to,” Cassidy said. “But if they’re moving further away because they don’t need to commute into the city anymore, then they need a place to work at home. So, they need a designated space, they need more space. And if they’re going to be in it all day, every day, they want more amenities.”
The increased activity has dwindled the inventory throughout the tristate region and turned it into a sellers market. Active listings in Fairfield county have dropped from 5,871 in June 2019 to 3,806 in 2020 – a 35 percent difference over last year. Counties in New Jersey and Long Island are similarly seeing inventory drops in the 30 percent range, according to a data analysis by The Real Deal.
“It is definitely a vicious cycle because what happens is someone wants to put their house on the market, but they’re afraid they won’t find anything. So then they don’t put their house on the market,” Cassidy said.
The number of single family homes sold between January and July 10 increased 5 percent, while those under contract increased 11 percent, according to MLS data shared by Malloy. The average sale price similarly has gone up 10 percent as families invest in larger homes and bidding wars push the price up, the data shows.
“I’ve been through the amazing times of 2005 and 2006 when we were doing offers on the back of the car and we were in bidding wars, and then, all of a sudden, the market crashed and you weren’t seeing those things anymore,” Malloy said. “I didn’t think we were going to see these times again or anytime soon.”
Westchester agents don’t argue that not being able to show houses, while agents in the neighboring county were deemed essential businesses, hurt.
The latest Douglas Elliman report on the second quarter shows that the number of sales closed in Westchester plummeted 27 percent compared to last year. Putnam and Dutchess counties only saw a slight decline of approximately 4 percent.
In statements, Douglas Elliman president and COO Scott Durkin blamed shelter-in-place orders preventing showings as well as a steep drop in inventory.
In Westchester County, inventory declined almost 23 percent and in Putnam and Dutchess counties, the decline was nearly 21 percent.
But Gino Bello, a top broker for Houlihan Lawrence in Westchester, said that inquiries have increased, mainly in June after shelter-in-place was lifted.
Searches for single family homes increased 61 percent year-over-year in June, with residents prioritizing decks, fenced-in yards, gardens and water access in their hunt for a new home, according to Bello.
Bello expects a highly active market over the next few months, but fears that the upcoming presidential election as well as a resurgence in coronavirus cases could stifle that growth.
Sonja Cullaro, an agent with Christie’s International Real Estate Northern New Jersey, said the market has been re-energized by the pandemic.
Although contract signings were down in both May and June, likely a reflection of the lockdown in March and April, there are signs of a rebound. Single family homes under contract during mid-to-late June increased 46 percent compared to last year, according to NJMLS.
The luxury market – defined as properties over $1 million – saw the greatest boost in sold listings, which were up 11 percent year-over-year, according to the data pulled by Cullaro.
Even for buyers who were investing in a secondary home, the considerations have changed.
“We’re seeing a lot of buyers looking for secondary homes, but they’re looking at school systems when they’re looking at these secondary homes,” Cullaro said. “So I think they’re mindful that their secondary home may become their primary home.”
Contact Sasha Jones at email@example.com