Every paper wanted to tell this story about the NYC Housing Market…
Everyone is fleeing New York! New York is dead! There is rampant crime! The neighborhoods are being overrun by a combination of homelessness and zombies! And…Everyone will be selling their homes at a firesale discount price!
People tried to move, but couldn’t sell their apartments, so they turned around and came back, sheepishly.
The Final Chapter will be:
People sold, hated the suburbs, and now are clawing their way back in!
Very little of this is actually true.
The implication of articles written in the early days of the pandemic, or what at people took away in Chapter One, was that the only people leaving were owners, predicting some kind of housing collapse. What did we ACTUALLY see? Mostly- a complete lack of inventory coming to the market, three months of no activity, and yes, 300,000-400,000 young professionals going to their childhood homes. A collapse of the RENTAL market ensued. Rents were down 30-40% in short order. All of those moving vans you saw? That was renters giving up leases, and nothing else.
When the housing market reopened June 22nd, the rental market continued to be horrible, because offices weren’t reopened. And so no young professionals returned. Otherwise, real estate transactions took time to get going. That was it. It took four months for things to pick up steam. People went to their second homes, hunkered down, and kept life simple. Maybe some folks bought second homes, or perhaps couple accelerated their moves to the suburbs, moves that would have happened anyway.
Sellers in New York have maximum capacity to withstand the insanity, financially or otherwise. Almost no one is or was selling at fire sale prices. They won’t, either. The government is doing all it can to prevent it, and those who qualified to buy expensive homes in New York City were already positioned to weather the storm, indefinitely. And the storm is mostly over.
Mostly the issue wasn’t that people tried to sell and couldn’t. It was that they couldn’t fathom selling at the market pricing levels, and just held on. No sheepishness, just stubbornness- and staying power. Yes- A few, a tiny percentage, moved to Florida for the year, because they had maximum flexibility to run their businesses from anywhere, because they can save so much money on their income taxes. They may not have even sold, or were trying to sell under the radar (until they couldn’t) .
But what happened on the other side of the spectrum? Those buyers who felt priced out were priced IN. They thought they had to get out, and realized they were price INTO the market, and could stay! Sort of the opposite of Michael Corleone in Godfather Three. A load of people who felt pushed out, suddenly, didn’t.
Three months later, bidding wars, a rental market that is on the rise, a rental market that will rebound in 2-3 years, if not sooner. A housing market that is on the rebound as well, and much sooner will see appreciation.
I continue to be struck by the timing of everything going on regarding these supposed “Covid Casualties,” people fleeing to Florida. Most of the big news about offices opening in Florida seemed more on the heels of Trump’s failed reelection bid, more so than the pandemic. South Florida will see people fleeing TO tax shelter, not FROM New York City. And business will follow. It’s more about the business climate than COVID. Perhaps 99% to 1%.
Really, I just don’t want to hear another person tell me that they hear everyone is leaving.
Where are you hearing that? Who’s telling you that? It was never real. It was hearsay and a few misguided articles, “told by an idiot, full of sound and fury, signifying nothing.” The same story were told twenty years ago in 2001, when people thought New York was over the last time. It’s a story that someone wants to hear, and so it’s getting told.
Redemption is finally here, theoretically, except that there was nothing to be redeemed from. The boring story, that there is no there there, sells fewer papers.
It bears repeating a few times: New York is not over. People are not clawing their way back in- because they never really left! The zombie apocalyse? More disinformation. The homeless are still here, yes, and the streets need cleaning. And the city needs a new mayor, which we’ll get in the June primary.
But let’s set the record straight. Yes, the economy will need time to recover. Yes, prices took a hit, and buyers are eagerly taking advantage for as long as they can. And when people wake up to see their second homes in whatever suburbs are too sleepy, the market here will see even more price appreciation. Until then, the not-dead New York will be our little secret. -Scott