When can New York agents show property again? And when they can, who will be looking, and at what? As the moment for New York City to open for real estate draws closer, the brokerage community is divided over what the re-entry will bring. Is there enough pent-up demand to send us out of the gate with a bang? Or is there still so much anxiety about the future that our new beginning will sound more like a whimper? It is, of course, impossible to know, but there will almost certainly be a diverse group of players at the table, on both the buy-side and the sell-side. A number of them will have differing or even conflicting priorities, out of which we will forge a market representative of both traditional and new residential priorities. The buyers and sellers who transact during the balance of 2020 will teach us what to expect going forward into the post-pandemic marketplace.
While all theories remain speculative at this point, I have a few about who will be buying, who will be selling, and why:
- Very wealthy older New Yorkers will consider relocating their primary residences. While by no means all wealthy older people will be planning to spend 183 days per year in Florida or Arizona, the pandemic will drive some to follow their fellow multi-millionaire snowbirds to the land of lower taxation. Since people over 65 display a higher risk profile, and often have at least some co-morbidities creating even greater risk, COVID-19 may give them the push they needed to relocate for at least half the year. Many will sell their larger apartments and look for pieds-a-terre. In the short term, this may add to the inventory of high-end co-ops in particular.
- Dual income families living in tight quarters in the city will go one of two ways.
- Some of these couples with a few kids will be going mad after three months in a two-bedroom apartment and will flee to the suburbs where they can double or triple their space for the same money. This will be particularly true for those who can then save big by relocating to a town with high-quality public education. The apparent viability of work-at-home protocols may also change the model for these families, enabling them to work shorter hours or fewer days in the office while doing more from a home office.
- At least as many will see this as an opportunity to step up in New York. Motivated by a once in a decade buying opportunity, these buyers will trade up while the market is down, thus saving considerable money while moving into a more desirable space.
- Even an economically destabilized United States will still offer opportunity to affluent foreigners. As the possible fracture of the E.U. feels more real, affluent European citizens will consider investing in the U.S. once again. Central and South Americans, whose fragile economies will plunge more deeply into chaos as the virus overwhelms their health care systems, will be picking up properties as well, primarily in Miami but likely in the Northeast as well. Once travel becomes easier, both coasts will once again attract foreign interest. There may even be a few online buyers!
- The rental market will be extremely active at prices below $10,000 per month. Smaller and less expensive rentals will gain in popularity with large numbers of people demonstrating some commitment phobia. The ultra-luxury rental market will likely suffer, however, as it so often does when circumstances present a buying opportunity. In the summer and fall markets, buyers committed to New York will not want to rent. At least the smart ones will have learned a lesson from 2002 and 2010: opportunity is here. Don’t waste it.
For now the city is quiet. No movie theaters, no Broadway shows, no Yankees or Mets, no Carnegie Hall or Metropolitan Opera. But New Yorkers know this is not forever. They all want their live music, their live sports, their live restaurant dinners. While no one knows exactly when those pleasures will be back, they WILL be back. The smarter among city residents will have great new homes when that moment comes; happily working a day and a half from their home offices, they will look out at the re-animated city with pleasure and satisfaction.