City v Suburbs

David Goldsmith

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There are going to be those like myself who always have had an attraction for it. But I spent my teens going through neighborhoods in NYC that I think most newcomers/millenials/whatever can't even comprehend. I think we are seeing a rise in crime which will help chase many who thought being a gentrifier was "cool" or "edgy" out of marginal areas, especially if their typical comforting retail icons don't bounce back so quickly. What's the advantage of living in a big city? I think a lot of the things those who moved to big cities were chasing might not be there as much post-COVID, especially as you say if it's no longer necessary to get certain kinds of jobs.

But also for those who are going to stay I think they clearly are going to need larger apartments, but at least in NYC the apartments being built (except for the very high end) have gotten smaller. And since I see people taking home the same or less money than before, I think they are going to need those larger apartments for the same or less money. If they can't get that, I think it will push them to move to where they can.
 

John Walkup

Talking Manhattan on UrbanDigs.com
Many firms, including FB, will make comp in-line with location, meaning WFH won't be a free option. That will be a tricky choice for many since it's easier to get out than it is to get back in. Will hurt the burbs most. Winners will be exurbs, but due to worker dispersion, no locales will see real influxes so none will really "win".
 

John Walkup

Talking Manhattan on UrbanDigs.com
Agree with increased demand for larger places. Possible to see a value trickle-down if, after years of declines, prices for larger/luxury units hold steady? Unfortunately, (putting aside retail and crime) more middle-class parents view the school system as oppositional... and the center needs to hold for any recovery.
 

David Goldsmith

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One rule of thumb I've used for many years has been "Can a family with 2 working parents afford a 3 BR apartment in a decent neighborhood?"

With WFH I think that changes to at least a 4 BR. Not so sure in post COVID-19 New York that's viable at current numbers.
 

John Walkup

Talking Manhattan on UrbanDigs.com
Interesting - I'd be curious to see how the price of 3beds tracks income and population across nhoods
 

John Walkup

Talking Manhattan on UrbanDigs.com
Thanks David - another interesting, albeit anecdotal piece. We started pulling some numbers for the burbs and found that *actual* demand (as measured by deals) is up by about 20% in most areas. Some places are seeing +50% bumps. Meanwhile, Manhattan remains in lockdown with demand artificially curtailed so no way to really know what the true delta between city and burbs, but if there is a real estate physics law 'Demand Cannot Be Created Or Destroyed' it would imply that if burbs demand is up 20%, Manhattan demand is down 20%.
 

David Goldsmith

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Staff member

Zillow survey forecasts suburban boom as remote workers flee pricey cities in search of bigger homes

The Seattle real estate tech companies that have spent the past several years reporting on how attractive and hot tech hubs like Seattle, Silicon Valley and elsewhere are have shifted gears during the COVID-19 pandemic. The darlings of the latest real estate projections are secondary cities, the exurbs, bigger homes and more space.
Zillow weighed in this week with the results of a survey tied to remote work and how it could affect where Americans want to live, with 75 percent of those working from home saying they would like to continue to do that at least half the time after the health crisis subsides.
That work-from-home desire also leads two-thirds of employees (66 percent) who have that option to say that they are at least somewhat likely to consider moving as a result. It’s a shift from the past decade that has drawn more people closer to urban cores and tech jobs — and spurred an explosion in home value growth and an affordability crisis in places like Seattle.

Zillow’s take is in line with comments made recently by Glenn Kelman, CEO of Redfin, who predicted on an earnings call that remote work could lead more people to leave cities like New York, Boston, San Francisco and Seattle in search of cheaper real estate and more space. He called out smaller cities such as Boise, Idaho, Bozeman, Mont., and Tacoma, Wash., which could see an influx of home buyers.
Redfin further reported on this trend on Thursday with data showing that page views for houses in small towns (populations less than 50,000) were up 105 percent year over year during the seven-day period ending May 1. The views climbed 76 percent for rural counties with fewer than 10,000 people — down from a peak of 170 percent a month earlier.
Redfin also said the draw to small towns extends beyond browsing to actual sales. While pending home sales are down across the board, less-populous areas aren’t being hit quite as hard as large cities.

Glenn Kelman@glennkelman

https://twitter.com/glennkelman/status/1260981794087645185
Replying to @glennkelman

4 of 7: Boise @Redfin agent Kristin Lopez said, “90% of my clients are coming from California, Seattle or Portland. People were thinking about relocating or talking about relocating before the pandemic, but COVID was the straw that broke the camel’s back.”

101

1:14 PM - May 14, 2020
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Glenn Kelman@glennkelman

https://twitter.com/glennkelman/status/1260982370749911041
Replying to @glennkelman

6 of 7: What's changing isn't just where people live, but what they want. Florida @Redfin manager MaryDell Penney said, “Pre-COVID, people wanted beautiful open floor plans. After months in quarantine, buyers want quiet spaces to get away from everyone else, for school and work.”

115

1:16 PM - May 14, 2020
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On the heels of Twitter announcing that some employees will be allowed to work from home forever, Bloomberg also reported Thursday on how Silicon Valley tech workers are looking to escape sky-high rents for more affordable options away from San Francisco.

Zillow found that people aren’t just looking to take advantage of the ability to do their job from anywhere, they want to be more comfortable while doing it. Of those surveyed with WFH as an option, 31 percent would consider moving in order to live in a home with a dedicated office space, to live in a larger home (30 percent), and to live in a home with more rooms (29 percent).
“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,” Zillow senior principal economist Skylar Olsen said.
The trade-off is moving away from a wider variety of restaurants, shops, and urban amenities. Olsen said “we’re not talking about the rise of the rural homesteader on a large scale,” but rather a remote workforce that still favors suburban communities or secondary cities that have many of the amenities plus the bigger homes.
For those who work from home some of the time and still make a trip into the office, breaking up the routine can change what they’re willing to put up with when it comes to a commute.

Previous Zillow research found renters, buyers and sellers overwhelmingly agreed that the longest one-way commute they’d be willing to accept when considering a new home or job was 30 minutes. The new survey showed 50 percent who would be open to a commute that was up to 45 minutes or longer.
 

David Goldsmith

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Staff member
Tri-State brokers are busier than ever as buyers warm to suburban living
As pandemic upended priorities, sellers markets have emerged in Fairfield, Conn.; Irvington and Rye, NY; and the Hamptons

The coronavirus has dramatically reshaped the luxury real estate market in the Tri-State area, and while the pandemic upended much of the economy, industry veterans say they’ve never been as busy as they are now.
While the early days of the crisis were marked by a mad rush for a limited supply of rental properties on Long Island and Upstate, transplants from New York City are starting to warm to the idea of staying in the suburbs for the long haul, brokers said Wednesday during the latest installment of TRD Talks.

“One of the really interesting things is that people are doing the opposite of what they usually do,” said Deirdre O’Connell, CEO of Daniel Gale Sotheby’s International Realty on Long Island.
“They’re buying in the secondary home market for their primary residence, and they’re rethinking Manhattan as their second place to live,” she said, noting that some buyers no longer expect to be in their Manhattan offices five days a week even after reopening.

O’Connell was joined by Compass’ Heather Harrison, who covers Westchester County; and Paul Breunich, president and CEO of William Pitt – Julia B. Fee Sotheby’s International Realty in Connecticut. The three spoke with The Real Deal managing web editor James Kleimann.

“Overnight it went from a buyers market to a sellers market, and also overnight it went from people migrating to the city to people escaping to the suburbs,” said Breunich, adding that many buyers no longer expect the New York City school system to open up on time in the fall.

Given New York’s massive population, “just a very small percentage of them have to move and it’s going to flood our markets, and that’s what’s happening now,” he said. “That’s why I think there’s permanence in this whole movement.”

While young families moving out of New York City have always been a mainstay of the Tri-State real estate business, the pandemic appears to be pushing some to move even earlier than usual.
“One of the trends we are seeing is families with no children moving to the suburbs,” Harrison said. “Newly married, not pregnant yet, and some not even married, moving and buying homes in the suburbs.”

At the same time, the archetypal sellers in these markets — empty-nesters looking to downsize to a Manhattan apartment or a Florida home — are also staying put more. This has even led to sellers cancelling contracts, paying a premium just to not move.

“So many of my potential sellers … have now decided that they’ve enjoyed quarantine in their home, and are very glad that they didn’t move and didn’t downsize to an apartment necessarily, and now those people have decided not to put their homes on the market,” Harrison said.

Even as New York and the suburbs have begun to gradually reopen from months of lockdown, some practices adopted in the Covid era might be here to stay — like virtual tours.
“I don’t think it’s going away,” O’Connell said. “Yes, we can do in-house showings now and that’s great, but I think it’s a lot more effective if someone can virtually tour a property before coming and physically touring a property.” She added it was “less intrusive for the homeowner who doesn’t have their home exposed to people that potentially are tire-kicking or just trying to figure out where they are in their journey of purchasing a home.”

Meanwhile, issues that had hampered the Tri-State resi market prior to the pandemic, like the new federal cap on state and local tax — aka SALT — deductions, may now be in the rearview mirror.
“I think now more than ever, it’s not as big an issue as it was,” said O’Connell, arguing that the market has largely digested the impact of the new rules. “If you want to live here, it is what it is.”

The panelists noted that the wave of new interest in their markets have touched submarkets across the board, as commutability to Manhattan has become less of a factor and the supply-and-demand dynamic has forced buyers to be less selective.

“When you have a lot of demand there and there’s multiple people that are going after it, that’s pure capitalism,” Breunich said. “And that’s why it’s such a good industry to be in, because nobody sets the market except the people.” The buyers, he said, are “coming in with cash. They want to move in in three to four weeks and they’re going for the mortgage afterwards. There’s a middle-to-upper crust of the population, in my opinion, that’s doing this.”
 

David Goldsmith

All Powerful Moderator
Staff member
Marcus & Millichap CEO predicts “exodus” from cities to last two years
Hessam Nadji said pandemic has accelerated millennials’ movement to suburbs

New York City is reopening, but Marcus & Millichap’s CEO is not predicting a return to form anytime soon.
Hessam Nadji told CNBC in an interview this week that demand was surging in suburban areas as people fled cities, a trend he predicted would continue for up to two years.

“I think the next 18 to 24 months are going to show a lot of exodus out of central business districts,” he said.

“We’re seeing there’s a lot of office vacancy, for example, in the suburbs that have now been absorbed,” he said. “There’s a lot of demand for rental homes that we’re seeing because people are fleeing especially hot spots like New York.”

Nadji said a growing number of millennials were already looking to the suburbs before the pandemic, but the health crisis had accelerated that pattern.
“It was a trend that was starting to happen already over the last two or three years. You have to remember that 60 percent of millennials are now in their 30s,” he said.

Some of the main areas where people are migrating from include New York City, Seattle and Miami, according to CNBC.
Despite his predictions about the short-term health of cities, Nadji said he was confident that busy areas would regain their appeal.

“I just don’t think we should count out the long-term prospects of the benefits of central business districts,” he said.
 
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