The rental market in New York City could be in for a beating as long-time residents are considering a permanent exodus in the wake of the coronavirus pandemic, real estate experts warn.
“What I’m really getting the sense of is that people want a better quality of life and an easier life,” says Janine Acquafredda, associate broker with RE/MAX Real Estate Professionals in Brooklyn. “This pandemic has made them realize just how hard it is to live here, how fragile life is and how quickly everything can just be taken away from them.”
Working from Home is Growing on People
Working from home under the mandatory lockdown may be playing a role in the decision to leave both New York and other large cities. A recent survey by Zillow, the real-estate listing website, found 75% of Americans working from home as a result of the coronavirus pandemic would prefer to continue that working arrangement post COVID-19.
A majority of this new breed of work-from-home professionals want more space to set up a home office. And a full two-thirds say they would consider moving if it allowed them to work at home when they want, the survey found.
One barrier to working at home in New York City and other urban areas is space: Many apartments just don’t have room for a traditional home-office setup. But suburban single-family homes may afford that. Some New York metropolitan real estate agents describe the interest in renting or buying suburban homes as “a frenzy.”
Still, Zillow says the pandemic has not made moving to the suburbs any more attractive than pre-pandemic days. Living in the suburbs has always been top-of-mind. While suburban listings get the bulk of Zillow’s page views, the company says year-over-year interest between April 2019 and April 2020 remained relatively flat.
New Yorkers looking to flee may be interested in leaving the region altogether. In metropolitan ZIP codes affected strongly by the pandemic, Zillow user traffic has shown a spike in New York residents looking at properties in several other national metro areas: For example, popular metro searches included Atlanta and Los Angeles.
Interest In New York City Has Been Declining
Local New York City real estate professionals say they’ve noticed a shift in people exploring homes beyond the city. Since the mandated stay-at-home orders took effect, experts report a sharp decline in real estate transactions across the city.
“There has been a knee-jerk reaction, primarily on the rental side, for well-heeled New Yorkers to escape the city, at least temporarily,” says Garrett Derderian, founder, CEO and a licensed real estate agent with GS Data Services, a NYC-real estate analytics and consulting firm. “There was a surge of interest for rental homes in the Hamptons, Upstate New York, Connecticut, parts of New Jersey and Florida.
“While these regions are popular summer home vacation rental spots, many moved up their plans to decamp for these areas earlier than the typical season starts.”
But others are looking for a more permanent move.
“So many of the people that I’ve been speaking with have thought about this for a few years,” Acquafredda says. “This pandemic, the lockdown, the city’s response—or lack of it—along with the post pandemic protesting, rioting and looting has just accelerated people’s plans.
“Many have been turned off by the high cost-of-living, the noise, the filth, the constant construction, traffic, increasing taxes, endless fines and penalties—it’s all just become too much to handle with too little reward.”
Too Many People in Too Small a Space
Density plays a big role, as well. New York City has about 28,000 residents per square mile, and people are now seeking more space and distance, which suburban areas in Connecticut and New Jersey can offer, says Dorothy “Dottie” Herman, CEO of Douglas Elliman, one of the nation’s leading real estate brokerages.
“With more people being required to work from home, we believe this trend will continue,” Herman says. “Millennials with young children are now able to work from home, which reduces their overall time spent commuting. This allows them to move farther away from New York City than they may have ever considered before and offers more space in a less dense area.”
Meanwhile, Acquafredda says her clients are not only looking in the suburbs and in the Hudson Valley region, but also beyond. “I have people asking me if I know anyone that can help them move down south, primarily Florida and the Carolinas, but also Arizona and Nevada,” she says.
Glimmers of Increased Mortgage Activity
The silver lining for the real estate business overall could be the pent up demand when the country emerges from the pandemic. People are realizing the value of their homes, since they have been sequestered there for several months. Not only is a designated work space important, but so is the improved quality of life that comes with less commuting and more family time.
Herman says more people are trying to get mortgages, especially compared to March, April and the beginning of May, as most of the Northeast was shut down only allowing people to tour properties virtually.
“As cities begin to reopen, we are starting to see a slow and steady recovery,” she says. “With the nation’s mortgage rates at historic lows, this too has caused an increase in mortgage applications. However, some borrowers may find it more difficult to qualify, as financial institutions have increased their lending standards, amid the economic turmoil of the COVID-19 pandemic.”