Suburb Real Estate Boom
Lately, it seems that many are rooting for the fall of New York City, reporting on an alleged exodus and claiming the calm of the suburbs will replace the rumble of the Big Apple, even after the COVID-19 pandemic is over. And in many ways, they are right, but various real estate professionals from the tri-state area believe the New York City exit is temporary and complicated.
"The Manhattan housing market has been hit particularly hard," said Garrett Derderian, the founder of GS Data Services, adding that as potential buyers remain cautious about purchasing property in the city, the number of condo contracts declined by 34%, co-ops dropped 33% and small family homes dropped 11%.
Meanwhile, in Greenwich, Connecticut, the number of contracts signed went up 186% compared to this time last year. In the Hamptons, contracts went up 104%, and in Westchester, agents also saw more activity, though the market may have already peaked, Derderian said.
Yashmin Lloyds, a Compass broker in Connecticut, said that while, yes, Greenwich is having the strongest market it has had in a decade, it's all very "temporary," and with all the demand, realtors are actually running out of inventory. There are no rentals available, and most of the homes still on the market are very high-end.
For even the most established of realtors in the city, the boom in the suburbs is a red flag, but that doesn't mean it's permanent.
"Everyone's scared. A lot of major landlords are extremely nervous," Chris Okada, a broker and investor in Manhattan, told ABC News. "I mean, the Upper East Side is a ghost town. There are moving trucks everywhere ... But we're hopeful."
"When people talk about the New York City exodus, they're talking about pockets of Manhattan," he said. "But they're forgetting that Brooklyn, Queens and Staten Island have a whole demographic of people that are not gonna be moving at all, because of family, because of work, because of different situations."
Lindsay Barton Barrett, a Douglas Elliman agent in Brooklyn, said the stories about the exodus came out because the city was shut down and other markets started operating much sooner. "So, if you shut down New York for any time, of course you are going to see a comparative activity anywhere else," she said.
She said that many New Yorkers went to their parents' or in-laws' second homes for the first few months of the pandemic and were active in neighborhoods where they usually aren't. Summer towns got activity before the summer, suburbs got an influx of people, and still, New York remained closed. "It changed the market temporarily," Barton Barrett said, "but not fundamentally."
Currently, Derderian said, the Hamptons is the strongest luxury market in the tri-state region, with the number of sales between $3-5 million up 259% and the number of sales priced between $10-20 million up 150%. But many of those buyers also have properties in the city, and may be investing in the suburbs because they've realized they want more space and better living conditions on the weekends.
Other real estate professionals are seeing the current New York City housing market as an opportunity to invest and to sell the suburbs.
Jacqueline Trelease, an agent for The Corcoran Group in the Hamptons, does believe there is a New York City exodus, but in her eyes, it's a good thing.
"Schools [in the Hamptons] have had declining enrollment for years, businesses and restaurants struggle to survive on the offseason," she said. "I think this is going to be refreshing. Year-round residency is a different vibe than summer. It should be seen as a good thing and probably with our ability to work virtually a more long-term situation."
About half of the clients she's rented to this year are choosing to stay in the Hamptons rather than return to the city, she said.
"They've been out of the city with yards and pools since March and they've realized these places offer a lot more year round than they thought," she said.
Prices for homes in the Hamptons have risen, she added, but there's so much demand that people are agreeing to pay a lot more money than usual.
For many, experts said the pandemic was the excuse they needed to leave New York City.
Lisa Chajet, of Warburg Realty, said she does think there is a demographic that is leaving the city and not coming back. "It's the younger people who always had one foot out the door and this just pushed them," she said. "They were the 20 and 30-year-olds who were living here out of convenience and in small rentals. Why are they paying $6,000 a month for a crappy two-bedroom when everyone was working from home?"
Lloyds said that people moving to Connecticut from the city are young families or older couples looking for more space and a better quality of life. "But it was already in their 10-year plan," she said. "For some, it just tipped the scales."
The same goes for parts of Brooklyn -- while the borough is not a suburb, it is also not Manhattan, and for residents hesitant to leave the city amid the coronavirus outbreak, it's far enough. "They are people who always thought about doing it before," Barrett said. "They were waiting for the right time and this presented itself as the right time."
Because of the overall uncertainty, though, some prices are dropping. "Studios in Manhattan and Brooklyn are getting the biggest reduction because no one can live in a studio right now, it's too claustrophobic," Jane Sosi, a Compass agent in the city, said.
"Right now, there are many apartments coming on the market," said Dorothy Schrager of Warburg Realty. "The crisis has caused many people to reevaluate their financial future and sell their apartments. And, if the country remains as angrily divided as it is, that might also cause more people to leave. The outcome of the elections can be a big factor in the future of all cities."
Still, long-term investors are taking advantage of the price drops and buying properties in New York that they can sell once things return to "normal."
Okada, who is a commercial real estate broker, bought his first residential property in Brooklyn amid the pandemic. "I felt it was the best opportunity because there was no competition," he said, adding that while "there's not necessarily a New York exodus, people are going to look for a better quality of life, so places like Brooklyn are going to do even better."
"Exodus... perhaps to Brooklyn," agreed UrbanDigs' COO and co-founder, John Walkup. "The Brooklyn market is doing better this summer vs. last summer, so perhaps the problem is not New York City, per se, but Manhattan and its price points. While Manhattan certainly seems quieter, it's still an open question as to how many folks have permanently left and how many are just waiting out the pandemic in other places. We need certainty on schools, jobs, and safety before the full numbers on any exodus will be known."