There’s an exodus from NYC. But can it last?
Buyers and renters flock to vacation haunts and suburbs, but doubts of an enduring revival remain
Riddled with coronavirus-related anxiety and watching his four-year-old grow increasingly sad being quarantined in their Chelsea apartment, Hemant Jain and his family in April made the decision to pack their bags and escape the city.
Last summer, Jain, who works in advertising, bought a second home in Narrowsburg, New York for weekend retreats into the Catskill Mountains. Now, faced with uncertainty over what a post-Covid-19 world may look like, he’s considering making the house a more permanent home.
“A combination of factors are on the whiteboard of decision-making,” Hemant said, weighing working from home, the future economy and his family. “I don’t know where we are at this point, but it seems that if I was given a choice, I’d stay.”
Real estate agents from across the tri-state area are increasingly fielding calls from New York City residents looking to relocate. According to the U.S. Postal Service, there were 137,000 mail forwarding requests from New York City in March and April, more than double the monthly average. Sixty percent of those new requests were for locations outside the city, according to the New York Times.
Still, it’s too early to say the exodus from Manhattan and brownstone Brooklyn represents a resurgence of the suburbs, or a momentary surge in demand.
“Let’s rent it and make some money”
As the Covid-19 pandemic took hold of the city in March, agents in the Hamptons saw a two week freeze in negotiations. Then came the renters.
“What was a normal running river quickly hit the rapids,” said Bespoke Real Estate co-founder Cody Vichinsky.
In April, there were nearly five times more contacts on Out East rental listings compared to last year, according to data provided by the Zillow-owned portal. However, there was also a 28 percent decrease in new rental listings that month.
Renters, who were in search of housing months before peak rental season, began reserving homes long-term, further saturating a market low in supply.
“I’ve never had so many people ask for a June rental ever,” said Corcoran Group broker Susan Breitenbach. “We have a lot of spec houses now that I’ve decided to throw some furniture in there, finish up real quickly. Let’s get that up, let’s rent it and make some money.”
In a few cases, renters have become buyers as they spend more time outside the city.
Breitenbach said she found a buyer for one Hamptons home that she’d been marketing for six years. The buyers pulled the trigger after renting the home for two months.
“Things happen and it’s good to have a place in the Hamptons,” Breitenbach said of crises that result in mass exoduses to the suburbs.
But the market is not just filled with families looking for Hamptons vacation homes.
A demographics right-sizing?
Old-money bedroom communities like Greenwich, Connecticut have suffered in recent years as young families have opted to stay in the city longer.
There was some hope at the beginning of the year as single-family sales in Greenwich hit their second highest first quarter totals in a decade, according to a Douglas Elliman report. The pandemic, instead of causing disaster to the market, may instead bring a much needed demographic change.
Rob Johnson, the top producing agent at Halstead in Greenwich, said that although he has some clients still interested in higher-end houses, the biggest shift has been within smaller homes.
Pre-pandemic, families were moving to the suburbs later in life in search of houses at higher price points. Recently, the buyers have been mostly young couples, with at most one child.
“When an event like this happens, what’s important to them in their home life becomes very different,” Johnson said.
Westchester County similarly saw a sharp increase in single family homes during the first quarter of the year, according to a report by Douglas Elliman. The increase follows two years of weakening sales in the county.
While some buyers do fear multiple waves of the coronavirus and want a sanctuary for that possibility, not all are driven by the same fears. Some are simply city residents who have rethought what they want their homes to look like, brokers and observers said. Inspired by the possibility of working remotely, they want to provide space for recreation and yards for their children to play in.
“I think the structural change is more related to Zoom than the virus in the long run,” said Jonathan Miller, founder of New York-based appraisal firm Miller Samuel.
Before the pandemic, home supply nationally was at its lowest point in seven years, according to a report by Redfin. Once buying picked back up, real estate agents found themselves fielding more calls than before and frequently participating in bidding wars.
In a four week period ending May 10, nationally approximately 40 percent of offers on Redfin faced competition. In a few metro areas, the bidding rate was above 60 percent, according to the report by the brokerage.
Eugene Cordano, executive director of sales of Halstead’s New Jersey branch, said that bidding wars have been frequent in the last four months.
“Right now, your days on the market are probably down to, in some cases, single digit or maybe 15, 20 days,” Cordano said. “And the houses are under contract and being snatched up.”
Interest is particularly high in the Essex County towns of Montclair, Glen Ridge and Verona, he said.
“The COVID lockdown situation has probably not done anything to stem the tide of people leaving — New York, New Jersey, Connecticut — high tech states to low tech states,” Cordano said. “But, the people coming in and snatching up these houses presently in New Jersey, especially in the suburbs, are people who still need to be in the New York metropolitan area. They just don’t want to be in the city.”
Chuck Petersheim, founder of Catskill Farms, a development and real estate company in the Hudson Valley, said that he’s seen clients becoming increasingly aggressive since mid-May, with many houses staying on the market for no longer than a week.
“Typically someone has cash and someone’s waiving the mortgage contingency or the inspection contingency,” Petersheim said. “That’s true in many marketplaces. Even during a very robust market, that’s never been true in the Hudson Valley.”
Petersheim said buyers’ preferences have shifted during their search for their second homes. They’re prioritizing high-speed internet and space as they prepare for longer stays.
“Never bet against New York”
Still, many are not yet convinced that the increase in sales is going to result in a long-term revival of the suburbs. In part, some theorized, it will depend on how long it is before the city reopens.
“I know the ending of the story. The ending of the story is New York will be back and real estate will be back in the city,” said Donna Olshan, president of Olshan Realty. “I just don’t know how big the book is, how many chapters there are and how long it’s going to take to read.”
Olshan, highlighting the city’s vibrancy, encourages others to “never ever bet against New York.”
Some point to the return to the city following September 11, while others note that most of the homes being bought are secondary, with more permanent residences remaining in the city.
“Human beings once it’s deemed safe have an amazing ability to forget the past,” Miller said. “So that’s why I’m not sold on [the idea] that we’re at the end of the New York City experience and there’s gonna be five people left at Manhattan when this is all over.”