New York, I love you, but you’re getting me down, as LCD Soundsystem once sang. After three months besieged by the coronavirus pandemic, New Yorkers are heading for the suburbs – and some say they are never coming back.
Real estate brokers are describing a boom in demand for homes north of the city and on Long Island – and especially those that offer space for home offices. Competition is so fierce, says Madeline Wiebicke, a real estate broker in New City, an affluent hamlet some 20 miles from Manhattan, that city dwellers are snapping up suburban properties in bidding wars, often after just a video tour.
Demand for homes, say brokers, is fuelled not only by fears that coronavirus infections in densely populated urban areas could rise again next winter, but also by fundamental shifts in demand from in-office to remote workers, and by the protests following the police killing of George Floyd that have dominated New York’s streets.
Office life has been fundamentally challenged by Covid-19. Some employers have warned that social distancing measures could significantly reduce workspace, forcing a 60% reduction of daily headcount, while for many teleconferencing has proven a functional alternative to the daily commute.
“First off, it’s the virus, and people are just feeling done with small apartments. Then came the protests,” said Wiebicke. People are saying “they just can’t handle the city right now. They’re saying they want a quiet yard and most of all a home office.”
A quick look at the listings posted in the windows of real estate offices across Bergen, Rockland and Westchester counties – all within easy reach of New York City – shows the vast majority have accompanying “sold” stickers.
The rising demand for homes in the suburban areas comes against predictions that US economic growth will plummet this year, and that home prices nationwide will fall between 2-3%.
But there are plenty of people encouraging those with the money to move. “If you have to stay home for a period of time having a nice little backyard is not a bad way to do it,” Connecticut’s governor, Ned Lamont, told CNBC last month. Lamont added that “phones are ringing off the hook at real estate agent offices”.
Demand for suburban property, especially those with extra rooms or home offices, comes as a survey by the Seattle-based Zillow found that 75% of Americans that have been working from home due to coronavirus would prefer to telecommute at least half of the time once the pandemic subsides, and 66% said they would consider moving if their job allowed them to continue telecommuting.
“Moving away from the central core has traditionally offered affordability at the cost of your time and gas money. Relaxing those costs by working remotely could mean more households choose those larger homes farther out, easing price pressure on urban and inner suburban areas,” said a Zillow economist, Skylar Olsen.
According to the Pew Research Center, over 40% of jobs could be performed remotely, yet only 7% of American workers had the option to telecommute as a benefit before the Covid-19 pandemic.
A separate survey produced by Redfin found that 50% of respondents in cities like New York, Boston, San Francisco and Seattle said they would consider moving out of the city if remote working becomes permanent.
“Prior to this pandemic, the housing affordability crisis was already driving people from large cities to small. Now, more permissive policies around remote work, and a rising wariness about close quarters, will likely accelerate that trend,” said Redfin’s CEO, Glenn Kelman.
Proximity to a metropolitan center is still crucial, Kelman says, but the shift could be profound: “The whole narrative of the past 200 years, of the young person moving to the big city, may turn a little upside down in the years ahead.”
According to brokers, some of the homes that are now selling have sat on the market for years. More homes are set to come on to the market as the restrictions on brokers showing properties are lifted and states slowly reopen for business.
“It’s been surprising – and exciting,” said associate broker Mary Lovera. “Houses are going after multiple offers, often sight unseen. There have been closings right after the buyer did a walk-through, often for cash.”
Lovera credits the video-conferencing app Zoom for helping to establish a new system for the industry. “It took a few weeks to get accustomed to the new way of working, but luckily real estate was already set up for online.”
Meanwhile, New York is witnessing a property slump. Apartment prices and rental values in the city are already showing signs of decline. The number of new property listings and signed contracts in Manhattan fell 85% in April and May compared with the same months in 2019, according residential property analysts GS Data Services.
“In many ways, the demand mirrors the period after 9/11, when renters from the city decided to buy their first home,” says realtor Jeffrey Freundlich. “One- or two- bedroom condos, houses, townhouses, the demand is the same. People want to make an exodus from the city.”
It’s too soon to equate the demand to that of the early 1970s when middle-class families fled the city for the suburbs but that hasn’t stopped some brokers from stoking the fears that led to that era’s “white flight”.
Last week, Joseph Swedroe, a Corcoran agent in south Florida, sent out a promotional email in the hopes of attracting New York buyers.
Under the subject line “Looking for Change?”, the email showed an NYPD van in flames, with a juxtaposed images of boating and sandy beaches. Swedroe asked if potential clients want to live in “chaos or comfort”.
After firing Swedroe, a Corcoran spokesperson said the firm had “zero tolerance for this behavior”. The spokesperson said that the brokerage “categorically rejects racist and fear-based rhetoric in any form”.
“I want you to know how seriously we take this,” Pam Liebman, president and chief executive of Corcoran, told RealDeal. “In no way does this type of marketing represent who we are.”
