City v Suburbs

David Goldsmith

All Powerful Moderator
Staff member
New Yorkers Are Fleeing to the Suburbs: ‘The Demand Is Insane’
The pandemic is spurring home sales as prosperous city residents seek more space. One listing had 97 showings and received 24 offers.

Over three days in late July, a three-bedroom house in East Orange, N.J., was listed for sale for $285,000, had 97 showings, received 24 offers and went under contract for 21 percent over that price.
On Long Island, six people made offers on a $499,000 house in Valley Stream without seeing it in person after it was shown on a Facebook Live video. In the Hudson Valley, a nearly three-acre property with a pool listed for $985,000 received four all-cash bids within a day of having 14 showings.
Since the pandemic began, the suburbs around New York City, from New Jersey to Westchester County to Connecticut to Long Island, have been experiencing enormous demand for homes of all prices, a surge that is unlike any in recent memory, according to officials, real estate agents and residents.
In July, there was a 44 percent increase in home sales for the suburban counties surrounding the city when compared with the previous year, according to Miller Samuel Real Estate Appraisers & Consultants. The increase was 112 percent in Westchester, just north of New York City, and 73 percent in Fairfield County, Conn., just over the state border.

At the same time, the number of properties sold in Manhattan plummeted 56 percent, according to Miller Samuel.

The suburban demand, driven in part by New York City residents who are able to work remotely while offices are closed, raises unsettling questions about how fast the city will be able to recover from the pandemic. It is an exodus that analysts say is reminiscent of the one that fueled the suburbanization of America in the second half of the 20th century.
It is not just crowded open houses, multiple offers and bids above asking prices. People in New Jersey suburbs who have no interest in putting their homes on the market are receiving unsolicited calls and knocks on the door from brokers asking if they want to sell.

Of course, residents have left New York City for the suburbs for decades, especially to bring up children in towns with strong public schools. And it is very difficult to predict whether the new migration will continue at this pace once a vaccine for the coronavirus is available and office towers in the city fully reopen. What’s more, most New York City residents do not have the means to spend hundreds of thousands of dollars on a home in the suburbs.
Experts have predicted New York City’s demise during past crises, including the Sept. 11 terror attacks, only to be proven wrong. In fact, even as office towers in Manhattan remain largely empty because of the outbreak, some businesses, including Amazon and Facebook, are expanding their footprints, betting that workers will eventually return to their desks.
Still, many companies and workers have become much more comfortable with remote work during the outbreak, suggesting that the suburbs will remain very attractive for the foreseeable future.
For now, many buyers in the suburbs are expressing concern about the health risks of living in densely packed urban neighborhoods. Facing pandemic restrictions, they want room that New York City often cannot provide: a yard for their children to play and an office to work remotely. Many want land, even if it means being farther away from Manhattan.
Some buyers have told brokers they are concerned about reports of rising crime in New York City, real estate agents said. (Overall crime has not spiked in the city, but shootings have, Police Department data shows.)
“The people from New York are coming with a sense of urgency, and the thing they want is space,” said James Hughes, a real estate agent in New Jersey, who added that roughly 60 percent of potential buyers for his properties live in the city. “The demand is insane.”
Zack Stertz and Zoe Salzman joined the buying frenzy in June. After 15 years in Brooklyn, they said they realized soon after the pandemic struck that their two-bedroom apartment with a backyard, generous by New York standards, was too small for working from home with two young sons.

They could not afford a renovated brownstone in Brooklyn and were worried that New York City schools would not open for in-person classes in the fall, so they looked at New Jersey. They weren’t the only ones, their broker at the Allison Ziefert Real Estate Group warned them, suggesting they act fast.

When a four-bedroom house in Maplewood, N.J., appeared on the market on June 12, they toured it on June 14 and two days later submitted an offer over the $799,000 listing price — the highest bid among many offers. The sellers accepted it.
“To give up living in Brooklyn and move to suburbs, we just couldn’t see ourselves there,” said Ms. Salzman, 39, a lawyer whose office is in Manhattan. “But the pandemic helped make this choice for us.”
The flight out of New York City could inhibit the city’s economic recovery and its ability to maintain quality-of-life services like the police and sanitation, said Maria Doulis, vice president of strategy and operations at the Citizens Budget Commission, a nonpartisan fiscal watchdog.

“What is worrisome is that the high-income earners, particularly those with more than $1 million, provide a substantial amount of resources to the New York City budget,” Ms. Doulis said. “To lose them would really represent a blow to the budget.”
Mayor Bill de Blasio said this week that he had no doubt that New Yorkers who left during the pandemic would eventually return, though he appeared to be referring more to people who had temporarily moved elsewhere, including to second homes.
“If you don’t think New York City is coming back,” Mr. de Blasio said, “then you don’t know New York City.”
Still, real estate agents across the region say they have been swamped with calls from New Yorkers who are rethinking their desire to stay.

Moving companies have said they cannot keep up with the demand. Metropolis Moving in Brooklyn said the number of quotes for out-of-state moves jumped by more than 200 percent in May and in June compared with those months last year, and by more than 165 percent in July versus a year ago. Most people seeking quotes were moving to the city’s suburbs, he said, though others were moving to areas stretching from Washington, D.C., to Boston.

Zoe Salzman and Zack Stertz, far right, in Maplewood, N.J.Credit...Karsten Moran for The New York Times
Across New Jersey, more than 29,700 homes were sold in June and July, an increase of 33 percent over the same period in 2019, according to the Otteau Group, a real estate data and appraisal firm.
Jeffrey G. Otteau, who is the president of the company, said the buying spree was particularly notable because it was happening when fewer homes were on the market.
From the start of the year through July, the inventory in New Jersey dropped 40 percent compared with same period last year — a sign that many homeowners in the state were staying put during an uncertain economy.
“The demand has to come from somewhere, and we think most of that is coming from New York City,” Mr. Otteau said. “In some ways, this looks to me like the 1960s and 1970s, when there was a large outflow of the population pushing into the suburbs.”
Mr. Hughes, the New Jersey real estate agent, said he had multiple clients who each lost bids on about half-dozen homes, including a two-bedroom house in East Orange that received 25 offers. It sold for $345,000 — 21 percent over the asking price.
“It’s crazy for any period,” he said.
For more than two months, Rennes Toussaint and her fiancé, Olajide Keshinro, have been looking at houses in New Jersey. The couple, who live in a 500-square-foot apartment in Queens, have submitted offers for four homes, but lost out on all of them.

Before the outbreak, the couple discussed leaving the city for the suburbs, but never this soon. It became urgent when Mr. Keshinro, who plays professional basketball overseas, suddenly returned home early, Ms. Toussaint said, and the apartment felt even smaller.
“We thought it would be easy, but it’s very, very, very competitive,” Ms. Toussaint, 33, said about the housing search.
In New York’s Hudson Valley, the number of homes sold in July in Putnam County jumped 35 percent from the year before; they climbed 19 percent in Dutchess County.

Melissa Carlton, a broker at Houlihan Lawrence, said the area’s picturesque towns and scenic views had long attracted second-home buyers and people who want weekend getaways. But New York City residents have recently explored the area for permanent residences.
“Last year, people would say that a property may be too far away from the train station,” Ms. Carlton said. “That is not the case this year.”
That is how Rehana Alam and Sadi Alam feel. They live with their three children — ages 9, 7 and 4 — in a home they own in Jamaica, Queens. It is a 15-minute commute for Sadi Alam, a podiatrist, to get to work.
But the Alams have been concerned that her children have been largely confined to their home during the pandemic. Over the summer, the couple decided to get more indoor and outdoor space for their children.

On Wednesday, they closed on a five-bedroom house with a pool on two acres in Dix Hills, Long Island, about 30 miles east of Queens.
“The best thing I could have done was provided them more space,” Ms. Alam, 35, said. “Looking at their sad faces, it just wasn’t worth staying in Queens.”

David Goldsmith

All Powerful Moderator
Staff member
Stripe is paying employees $20,000 if they leave big cities — but they'll also get a pay cut
Stripe is paying employees $20,000 if they relocate from expensive cities such as San Francisco, Seattle and New York, where the company has offices. But workers who make the move will have to take a 10% pay cut.
"We want our employees to be able to make whatever life choices they feel are best for them without barriers," a spokesperson for the financial services and software company told CNN Business.
Leaving big cities has become increasingly popular since the pandemic hit. Signed contracts for sales of condos and co-ops in Manhattan, for example, plunged nearly 60% in July, while contracts for single-family homes in areas outside of New York City have skyrocketed, according to a recent report from real estate brokerage Douglas Elliman and Miller Samuel, a real estate appraisal and consulting firm.


Some commuting Americans are already saving money during the pandemic. Americans traveled nearly 37 billion fewer miles on the road in June, compared to the same month last year, according to the Federal Highway Administration.
Fewer miles translates into money saved. Employees who once commuted by car but now work from home are saving a total of $758 million per day, according to research from freelancing platform Upwork. Over the months since the pandemic hit the US, that figure amounts to more than $90 billion.

David Goldsmith

All Powerful Moderator
Staff member
Are New Yorkers coming back? These charts tell the story
Traffic and Citi Bike are normal again, but not much else is

Six months after New York was locked down — and 420,000 residents packed up and left — the city has largely reopened. Its Covid rate has been under 1 percent since midsummer. But are New Yorkers returning to town and their routines?
The answers are in the data.
The Real Deal drilled into the numbers to see if people are heeding calls by the real estate industry and elected officials to come back. We found that while traffic is nearly back to normal and Citi Bike is more used than ever, other levels of activity — though improving — remain well below pre-pandemic levels, and especially in Manhattan.

Since Phase 4 of reopening began in July, the city has been taking smaller steps toward normalcy. While theaters, clubs and indoor dining rooms remain closed, gyms and malls were allowed to reopen at limited capacity in August, as dining rooms will be at the end of this month.

Other signs of life: Foot traffic has bounced back in outer-borough neighborhoods, though it remains low in formerly touristy areas such as Times Square. Cars are circling again and complaints about finding parking are on the rise (on Twitter, anyway). And this week, after some stops and starts by Mayor Bill de Blasio, public schools started welcoming students again.

The Real Deal interviewed office landlords and looked at metrics — including public transit use, garbage collection, and mobility information — to see if, and where, New Yorkers are coming back. There are encouraging signs, but things aren’t back to normal just yet.

Landlords and real estate professionals are starting to see activity pick up at office buildings, after a very slow start once they were allowed to reopen in July.
Peter Riguardi, president of JLL in the tri-state area, said he has seen a noticeable increase at 330 Madison Avenue, where the firm has an office.

“In July and August I don’t remember riding the elevator with anyone other than myself,” he said in an interview. “But now you’re seeing more people as you navigate the floor to grab a Diet Coke or go to the men’s room or ride the elevator. The last few days have been like going back to school.”

The Durst Organization, one of the city’s major office landlords, has seen slightly promising indicators, with usage increasing more than 20 percent at its buildings after Labor Day — but only from about 8 percent to 10 percent occupancy. Fisher Brothers has seen a similar shift, with 10 percent of tenants present at the company’s office buildings after Labor Day weekend, up from just 4 percent earlier this summer.

“We’re hearing from tenants that they are looking forward to getting back to the office, where they can collaborate and be more productive,” said partner Ken Fisher. The company has added thermal temperature scanners and UV air-purifying systems to its properties to help workers feel safe.

“Post-Labor Day, there has been a real shift in tenants’ desires to get back to work, and we’re here to help them do that. We are all in,” he added.

Public transport took a big hit in the early days of the pandemic, with subway, Long Island Rail Road and Metro-North ridership all collapsing by more than 90 percent from monthly averages a year prior. According to data from the Metropolitan Transportation Authority, the recovery has been slow, with ridership on these modes of transport still at less than one-third of pre-coronavirus levels in mid-September.

Bus ridership, meanwhile, declined less steeply early on and has also recovered more quickly in recent months. That appears to have been boosted, in part, by bus service being free for most of the summer, with riders encouraged to board from the back to protect drivers from infection. As of mid-September, with bus fares reinstated, ridership is back to just about half of pre-coronavirus levels.

Car traffic, on the other hand, is closer to a full recovery: Traffic on the MTA’s seven bridges and two tunnels is just about 10 percent below the pre-pandemic average. This uneven recovery has attracted the attention of officials as well, amid concerns that lighter public transit use could make traffic congestion worse than it was before the pandemic.

“Leave the car at home. Take public transportation,” Gov. Andrew Cuomo told New Yorkers two weeks ago. “Try it. I think you’re going to be favorably impressed.”
Another mode of transit that has emerged as an alternative subways and buses is Citi Bike. Although the total number of rides is not out of line with that of previous years, the duration of a typical Citi Bike ride is significantly longer now, indicating a shift in travel and commuting patterns. A larger share of riders is now paying for single rides or day passes instead of annual memberships.

Mobility metrics — measuring people moving around — from location data firm Unacast show that Manhattan trails far behind the other boroughs in average distance traveled per day. The data also show that the city’s mobility rebound plateaued in July before surging in August, a trend that is reflected in mobility data for other counties across the country.

Garbage collection is another area that has seen a noticeable shift from pre-coronavirus levels — and where Manhattan has lagged the other boroughs. Monthly collection of all types of waste has risen significantly in the outer boroughs since the start of the pandemic, and this surge is most visible in the metal, glass and plastic category. Waste collection in Manhattan, meanwhile, has held steady or declined, depending on the type of waste.

The shift in garbage collection can be attributed to outer-borough residents being more likely than Manhattanites to continue living here, a Department of Sanitation spokesperson told The City when the trend first emerged in April.

But while these signs might give the city’s real estate industry hope, a return to what some might consider normal — the ability to linger at a restaurant, go to a concert, or be in an office with dozens of coworkers — will be difficult before a coronavirus vaccine becomes widely available.

Attempts at bringing larger numbers of employees back to offices have been uneven, as JPMorgan’s experience this month demonstrates. The investment bank sent some employees home after a worker tested positive for Covid-19, just days after directing some to return to the office.
“I think that’s what we’re going to have to expect with this virus,” JLL’s Riguardi said.

David Goldsmith

All Powerful Moderator
Staff member
“On the verge of a tragedy:” The stark numbers of a pandemic-hit NYC
City faces economic challenges not seen since the 1970s

About 24,000 New Yorkers have lost their lives to the coronavirus.
The city’s unemployment rate is 16 percent — twice the national average. And just 10 percent of Manhattan workers have returned to the office, putting into question the value of the city’s prime office stock.
Personal income tax revenue is projected to drop by $2 billion this fiscal year.

Only a third of hotel rooms are occupied, and Manhattan apartment vacancies crept over 5 percent in August for the first time in at least 14 years.
Those are the figures that best tell the impact of the coronavirus outbreak on New York City, which is facing structural challenges not since the fiscal crisis of the 1970s, according to the New York Times.

One stark example: Shares of Empire State Realty Trust, the REIT that owns the Empire State Building, have fallen by 50 percent this year.
“We’re on the verge of a tragedy,” Richard Ravitch, the former state official who helped New York City with its financial recovery in the 1970s, told the Times.

Sales tax revenue fell 35 percent in the second quarter and 15 percent so far this year, according to the Times. Income tax revenue is also expected to drop for the next few months.
The third pillar of the city’s revenue — property taxes — is the most stable, though property tax delinquencies have already risen and landlords are gearing up to challenge their assessments.

Ravitch is calling for sweeping budget cuts and the establishment of a financial control board. The city, facing a $9 billion revenue shortfall, has explored the option of deficit spending, and reportedly wants the state to authorize up to $5 billion in borrowing.

But the Times notes that deficit spending may not cure the city’s ills — meanwhile, it cannot count on the state for support, as the state is facing its own $14.5 billion revenue shortfall. And federal help has been hard to come by.
“It’s clear there are going to be hits for years to come, you can’t deny that,” Bill Neidhardt, the press secretary for Mayor Bill de Blasio, told the Times. “We’ve been calling for a stimulus, and Washington has done what they do, which is nothing.”

David Goldsmith

All Powerful Moderator
Staff member
Billionaires continue to flee their Upper Eastside mansions.
Ron Perelman shopping side-by-side Upper East Side homes for $75M
Financier has also reportedly sought to sell his East Hampton estate in recent weeks

Billionaire businessman Ron Perelman is looking to unload two connected townhouses on the Upper East Side for $75 million.
The investment banker is seeking $65 million for the larger of two homes he owns on East 63rd Street, the Wall Street Journal reported. That property spans 19,000 square feet and was originally built to be the Hangar Club, a private club for aviators. The smaller of the two houses, which spans just 7,000 square feet, is asking $10 million.
The two townhouses, which sit about a block and a half from Central Park, are connected via a door and are listed separately, but could also be sold together. Serena Boardman of Sotheby’s International Realty has the listing.
Perelman did not confirm the listing, but said in a statement to the Journal that the pandemic has led him to “think carefully about myself and my business, and to reset my priorities.”
The investment banker, who leads the firm MacAndrews & Forbes, has also sold off a number of other personal assets, including jet airplanes, yachts and parts of his art collection, according to the Journal. Perelman is also reportedly shopping his East Hampton estate for $180 million as a whisper listing, but has denied reports that it was on the market.
Others have sought to rid themselves of their luxe Upper East Side mansions recently, even if that means listing them at a steep discount. Developer Keith Rubenstein of Somerset Partners reduced the price of his palatial New York home at 8 East 62nd Street from $84.5 million in 2016 to $65 million when it re-listed in September.

David Goldsmith

All Powerful Moderator
Staff member
Long Island plots to keep gains from pandemic shift out of NYC
Repurposing office parks, malls seen as key to retaining new interest in suburbs

Long Island is aiming to keep the business it grabbed from New York City during the pandemic, and now it has marching orders.
Those include: more live-work housing, new uses for fading malls and corporate campuses, pop-up retail for downtown vacancies and outdoor enhancements.
The Long Island Regional Planning Council, a regional planning organization representing Nassau and Suffolk counties, commissioned two studies to set its priorities for the area’s economic development.
Among the findings were a need for housing with multi-generational living and slightly larger than multi-family rentals, spurred by foreclosures on the horizon and a reduced need for studio and one-bedroom apartments. Additionally, the studies called for Long Island to rezone to better accommodate work-from-home and extended families.

“There is significant synergy between the two studies as the long-term impact of Covid-19 can dramatically transform land use, such as a growing demand for suburban communities with thriving downtowns as people move away from dense urban housing,” said John Cameron, the planning council’s chairman, in a statement.

The studies also found that Long Island should reimagine uses for obsolescent malls and shopping centers, such as using the space for fulfillment centers — think Amazon warehouses — or housing. Uncertainty in spending, bankruptcies and the possibility that 50 percent of mom-and-pop shops might not survive the pandemic are all reasons to be hesitant of retail, according to the studies.
Office parks need repurposing as “many office building sites in suburban areas will languish unoccupied until a market-receptive use materializes,” one study reads.

Instead, the area will shift towards industrial spaces, pop-up retailers and mixed-use developments in the next 36 months and beyond.
“The findings of the two studies announced today prove that across Nassau and Suffolk counties we must address the challenges — and embrace the opportunities — to ensure we have a thriving economy on Long Island as we move past the pandemic,” the council’s executive director, Richard Guardino, said in a statement.
Restrictions facing New York have, for months, given Long Island an advantage over the city, resulting in renters rushing to the area. The area reopened for indoor dining in June, capturing customers, while New York restaurants had to wait until the end of September. Covid-10 surged again this month in a number of Brooklyn neighborhoods, sending them back into lockdown.

But for many years before Covid, Long Island business leaders warned that its suburban areas were struggling to hang on to twentysomethings and needed to adapt as New York City gained nearly 1 million jobs. Malls and “corporate parks” fell out of favor, while walkable neighborhoods and commercial districts became all the rage.
The business communities of Nassau and Suffolk Counties, not content to see Long Island become a giant bedroom community, have been pushing for redevelopment of its downtowns and transit-oriented development around its Long Island Rail Road stations.

Some of that has happened, but the island is still dotted with aging legacy assets, such as tired shopping centers surrounded by acres of asphalt. Covid, the studies found, has provided an opportunity as more living space and outdoor activity became a priority for many New Yorkers.

David Goldsmith

All Powerful Moderator
Staff member
Connecticut sales soar in third quarter
Figures show interest in the suburbs surged over summer

Connecticut is seeing more than just leaves changing color and flight-avoiding tourists. It’s also seeing a high volume of home buyers looking to move.
Sales of single-family homes in the third quarter increased 30 percent year-over-year, to 13,960 from 10,698, according to a report by Compass. Average price surged 26 percent, to $478,915.

Homes also didn’t languish on the market, selling after just 64 days, or 6 percent faster than last year’s 68.

“With more people telecommuting and/or going into the office less frequently, many are seeking larger homes with more space and land as opposed to homes predicated on distance and time to Grand Central,” the report said.

Overall sales volume rose by $2.8 billion, an increase of 64 percent from a year ago.
While nearly all areas of Connecticut saw a rush in business, some fared better than others. In Southport, sales doubled to 52 and dollar volume skyrocketed 255 percent to $80 million from $22 million.
In Greenwich, third-quarter sales outpaced those of the second quarter, as pandemic-related interest in the suburbs gained momentum and pent-up demand was released.
From July 1 through Sept. 30, greater Greenwich saw 311 homes changed hands, up 89 percent from the 165 sold from April through June.

Although the report did not offer any predictions, it did draw one conclusion.
“One thing is crystal clear, greater Greenwich is on many people’s radar and the demand is red hot,” it said.

David Goldsmith

All Powerful Moderator
Staff member
"Manhattan saw the biggest increase in moves, with 110,978 people departing — a 500 percent increase compared to the same period in 2019. Brooklyn followed, losing 43,006 people during the same time period.

How many Americans actually moved during the pandemic?
USPS data reveals how many people moved, and where they went

How many people actually moved because of the pandemic? Though it’s hard to know movers’ exact motivations, new data reveals migration patterns during the height of Covid-19 lockdowns in most states.
Change of address data from the United States Postal Service reveals that 15.9 million people moved between February and July this year, according to MyMove, a platform that provides information for people who are relocating. MyMove analyzed data from both USPS and a Pew Research Center survey of 10,000 U.S. adults that was conducted in July.
Whether the newly relocated will stay in their new homes is less clear: The number of people who permanently moved was up by just 4 percent from the same period in 2019, while temporary moves rose by a more substantial 27 percent. Those temporary moves spiked in March and April, suggesting that people decided to be with family or relocated to a second home during the lockdowns.

“About a quarter (28%) told us [they chose to move] because they feared getting Covid-19 if they stayed where they were living,” said D’Vera Cohn, who authored the Pew survey. “About a fifth (20%) said they wanted to be with their family, or their college campus closed (23%). A total of 18% gave financial reasons, including job loss.”
The USPS data also showed that many people who moved left densely populated urban areas in favor of less-densely populated areas.
Manhattan saw the biggest increase in moves, with 110,978 people departing — a 500 percent increase compared to the same period in 2019. Brooklyn followed, losing 43,006 people during the same time period. Residents of Chicago, San Francisco, Los Angeles, Naples, Florida, Washington, D.C. and Houston also saw large drops in population during that period.

While it remains to be seen if the urban-to-suburban exodus will be a long-term thing, USPS data shows that many city dwellers did relocate to smaller, less urban areas. Two suburbs of Houston — Katy and Richmond — gained 4,400 and 3,000 new residents, respectively.
East Hampton, New York, also saw an influx of nearly 2,500 residents. In March, as government-mandated lockdowns set in, real estate brokers in the Hamptons said that a run on pricey rentals led to bidding wars for some properties.
The exodus from Manhattan led to a historic vacancy rate of 5 percent in September after setting a new record for each of the four preceding months.

If the vacancy rate stays that high, it could potentially lead to the repeal of the city’s rent regulations, which depends on a vacancy rate below 5 percent. That threshold, however, is set by legislators, and a new Housing & Vacancy Survey is not scheduled to be conducted until 2022.

David Goldsmith

All Powerful Moderator
Staff member
While I'm not sure it's time to buy the city just yet I do think the activity and price increases in a number of suburbs has all the earmarks of a bubble that isn't sustainable.

David Goldsmith

All Powerful Moderator
Staff member

Exclusive Spectrum News/Ipsos Poll: Most New Yorkers See a Future for Themselves In NYC
While New York City is still grappling with the coronavirus pandemic, a Spectrum News-IPSOS poll finds a majority of residents — 64% — see a future for themselves in the city. Twenty-four percent do not.

What You Need To Know
  • Despite pandemic, 64% of NYC residents see a future for themselves here
  • Poll finds 70% believe a return to normal will take six months or longer
  • Most residents are fine with COVID-19 restrictions but are split on whether they're comfortable taking public transit now

Poll respondents Peter Robinson Jr. and Kathlene Hernandez were both born and raised in New York. They're split over their prospects here.
“The city for me is an exciting place, always, has always been," Robinson said. “There’s nothing that can take me away. I’ve tried."
When asked specifically by a reporter about the COVID-19 pandemic, his answer was the same.
"No. This is my home. New York is my home," he said.
Hernandez disagreed.
“I kind of want to leave the city, now that I think of it. Because here, it’s like not a lot of houses, it’s expensive and it’s not really worth it, you know?” she said.
The poll shows most New Yorkers do not believe a recovery will come in the short term. Seventy percent say that it will take six months or longer for the city to get back to normal — with 39% saying they think it will take longer than a year. Just 19% see it taking less than six months.

“Polls just in general are important because they’re our best way to capture the voice of the public at scale," said Chris Jackson, a senior vice president at IPSOS.
Most residents say they’re fine with the many precautions in place — with just 36% saying they’re too restrictive. Fifty-eight percent say they’re not.

When it comes to mass transit, people are nearly evenly split — 48% to 47% — on whether they feel comfortable taking the subway or bus.

And 56% say they’re not comfortable dining inside a restaurant.

Poll respondent Tracey Simpson encouraged her fellow New Yorkers to return to their routines, slowly and safely.
“Even if you have fear, you have to sort of plow through it, get any kind of help that you need," Simpson said. "It’s not going to be the same. And I understand people have anxiety, but I think you have to sort of work through it and try to get back to some normalcy.”
Even with New Yorkers appearing hopeful in their city’s comeback, the pandemic is taking its toll financially. Forty-nine percent say they’re having trouble — or have had trouble — paying their bills as a result of COVID-19 while 46% haven’t.

The online poll of 850 city residents was conducted between October 7 and October 19. Its results are +/- 3.8 percentage points.

David Goldsmith

All Powerful Moderator
Staff member
Billionaire Paul Singer’s hedge fund dumps NYC for West Palm Beach
Hedge fund will keep outpost in NYC and open office in Greenwich

Paul Singer is taking his talents to West Palm Beach.
The billionaire is moving the headquarters of his hedge fund, Elliott Management, from Midtown Manhattan to West Palm, adding to a trend of financial firms setting up shop in South Florida, according to Bloomberg.
While Florida has no state income tax, a major motivator of the relocation appears to be that Singer’s co-chief investment officer and expected successor, Jon Pollock, relocated to his West Palm home during the pandemic. Other senior executives at Elliott Management have also moved to Florida full-time, Bloomberg reported.

Elliott Management, based at 40 West 57th Street, will still keep a presence in New York and will also open an office in Greenwich, Connecticut. It is unclear how many of the firm’s 466 employees will move to Florida. Singer himself will continue to spend most of his time in the Northeast, including at his apartment on the Upper West Side, the New York Times reported.
Company executives are hoping that opening an office in South Florida can help the firm attract more talent in the future, according to Bloomberg.

Elliott’s move will increase hedge fund assets in Florida by more than half, according to data from research firm Preqin, Bloomberg reported.
The move follows Carl Icahn’s investment firm’s relocation to Sunny Isles, Florida. Ken Griffin’s Citadel also plans to open a Miami office next year, according to Bloomberg.
Many hedge funders own second homes in Miami Beach or Palm Beach, but few have migrated to South Florida year-round and even fewer companies have moved their corporate headquarters from the Northeast.
In many cases, the firms that have moved south have only opened small offices rather than relocate the majority of their employees. This includes the hedge fund of billionaire Paul Tudor Jones, who opened an office on Banker’s Row in Palm Beach in 2016 shortly after buying an estate on the tony island for $70 million.

David Goldsmith

All Powerful Moderator
Staff member
Does taxing the wealthy really drive them away?

This year’s spring housing market came a couple of months later than usual to the leafy suburbs of New Jersey. But it was worth the wait.
Michele Kolsky-Assatly, a veteran agent with Coldwell Banker focused on Bergen County’s luxury market, has been busier than ever with the exodus of families from New York City.
“They never want to be locked up in a high-rise again,” Kolsky-Assatly said. “Die-hard New Yorkers, hedge fund Wall Street businessmen who never thought they would leave the city, are leaving or have left.”
If there were ever a time when a state could jack up income taxes on high earners without luxury-market brokers frothing at the mouth, this was it.

Last month, New Jersey slapped its top marginal rate of 10.75 percent — which had applied to those earning more than $5 million annually — on households making as little as $1 million. The 20 percent rate bump is retroactive to Jan. 1. Pushed through by Gov. Phil Murphy, it will generate $390 million a year for the state’s Covid-battered budget.
“The very high earners were already paying the high rate,” said E.J. McMahon, research director of the Empire Center for Public Policy, a think tank. “Now they’re hitting the mere million-dollar earners, who would be prime customers for luxury housing.”

So-called millionaires’ taxes sometimes draw howls from sellers of high-end real estate. But this one drew no great protest, in part because the pandemic has already put the market for larger New Jersey homes into overdrive. Moreover, Kolsky-Assatly said, the state’s high taxes are well known to homebuyers.
The uptick of taxes on millionaires, I can’t see it hurting us, really, because the people that are buying are wealthy people,” she said. “I don’t know that that will take precedence over lifestyle.”

Space and privacy are the needs of the moment. Before the coronavirus, young families were flocking to transit-oriented neighborhoods with walkable downtowns. Now, however, they are seeking out suburbs offering more space to work from home. Single-family homes with backyards are flying off the shelves. Mansions that had been out of favor in recent years are selling, too.
“Lots and lots of people are bidding on houses,” said Gene Amsel, president of Greater Bergen Realtors, a trade organization serving 7,500 agents in Bergen, Hudson and Passaic counties. “Are they coming from New York City? Are they coming from Hoboken? Are they coming from other areas? Yes to everything.”

From January to September, 595 New Jersey homes priced north of $2.5 million went into contract, up 67 percent year-over-year, according to Matawan, New Jersey-based appraisal firm Otteau Group.
The volume of contracts on homes priced between $1 million and $2.5 million also surged, to 4,119, up 40 percent year-over-year. The increase was 31 percent for $600,000-to-$999,999 homes and 26 percent for $400,000-to-$599,000 homes. Contract signings for homes cheaper than that actually fell, by 4 percent.

In other words, the more expensive the homes, the greater the percentage increase in sales this year has been. (See chart.)
Upscale neighborhoods in eastern Bergen — such as Alpine, Tenafly, Cresskill, Demarest, Englewood and Englewood Cliffs — as well as Saddle River are among the popular destinations, Kolsky-Assatly said.
“Tax policies at this point pale in comparison to the broader effect of the pandemic on the real estate market,” said James Parrott, director of economic and fiscal policies at the Center for New York City Affairs at the New School.

People on the move
Critics of raising taxes on the rich warn that over time it will drive high earners to lower-tax states, depressing the luxury market. They note that moving is easier for the wealthy, who often already have homes in lower-tax states.
“The class of people we’re talking about have a second home,” said McMahon. “At the very least they have a Florida home, and if they’re skiers, a Colorado home.”
But advocates of millionaires’ taxes say wealthy families typically choose a primary residence based on what they want from their lives, not on tax rates.

Take billionaire David Tepper. The hedge funder was the wealthiest person in New Jersey when he declared himself a resident of zero-income-tax Florida in 2015, prompting some New Jersey lawmakers to say the state’s top tax rate, which had risen to 8.97 percent from 6.37 percent in 1996, was scaring off the rich. (Tepper’s mother and sister were living in Florida.)
But Tepper, who owns the Carolina Panthers, recently moved back to the Garden State. Upon his return, he reportedly called New Jersey Senate President Steve Sweeney and said the state could expect about $120 million in income taxes from him, according to media reports. Tepper could not be reached for comment.

The millionaire’s burden
New Jersey is hardly the first state to turn to millionaires during a budget emergency. New York enacted a new tax in 2009 to help fill a deficit caused by the financial crisis. The rate was set at 8.97 percent on all incomes above $500,000.

The measure was slated to phase out in three years to make it more politically palatable for legislators, notably the Republicans who controlled New York’s Senate, and perhaps so high earners would be less likely to relocate. But rather than let it expire, legislators extended it in 2012, lowering the rate slightly to 8.82 percent and sparing taxpayers who earned less than $1 million. It was later extended twice more, most recently through 2024, wiping out any notion that it is “temporary.”

But evidence that it would backfire has not materialized. Although Rochester billionaire Tom Golisano in 2009 changed his residency to his Florida home, declaring it would save him $13,000 a day, few magnates followed the Paychex founder’s lead, and revenue from high earners kept growing.
The total tax liability of those earning $1 million or more annually rose from $15.9 billion in 2012 to $19.3 billion in 2018, the most recent year for which data was available, according to Freeman Kloppott, a spokesperson for the state Division of Budget.

“Some people do move, but the net benefit to the taxing jurisdiction is that they see a pretty significant increase in revenue,” Parrott said of new taxes on high earners.
The millionaires’ tax itself nets New York state north of $4 billion every year, not including what New York City reaps from its own income tax of nearly 4 percent. The combined city and state tax rate on high earners, approximately 12.6 percent, still exceeds New Jersey’s new rate by nearly 2 percentage points.
New York last year also raised its mansion tax, which had been 1 percent for homes sold for more than $1 million. The change, applied only to New York City, adopted a sliding scale with the top rate of 3.9 percent for a home sale of more than $25 million.

The city’s luxury market boomed during the first five or six years of the millionaires’ tax, then ebbed in the second half of the 2010s. Jonathan Miller, CEO of appraisal firm Miller Samuel and the author of Douglas Elliman’s monthly market reports, said the new mansion tax in particular caused a “significant drop-off in higher-end sales” in the city.
“The reason for that is because the cost of living in that location became higher,” Miller said.
Miller cautioned that while he understands New Jersey’s immediate fiscal needs, the tax may end up negatively affecting the state’s long-term financial health.

“You’re going to drive away the higher-end tax base, which could have the impact of reducing demand for higher-end real estate, and taxes and other revenue that they generate for the state,” he said.
But studies have found New Jersey’s and California’s taxes on the rich have a small effect on their location decisions, said Parrott, noting that the analyses predate the federal tax reform that took effect in 2018.

His own review of the New York data found that after its millionaires’ tax was enacted, the number of high-income earners in the state rose in line with the increase around the country.
“It shows there are certainly some people who move in the wake of those changes,” Parrott said of the body of research. “We cannot pinpoint exactly how many.”
Unanswered questions
Potential buyers who pay attention to tax policy have more to worry about than New Jersey’s expanded millionaires’ tax, the Empire Center’s McMahon noted. If Democrats capture the White House and Senate, they are sure to raise taxes on the wealthy, which is part of Joe Biden’s platform, he said.

“Crucial aspects of tax policy as it affects those very people are completely up in the air now,” said McMahon.
Even if people react to New Jersey’s latest tax hike, the market will eventually adjust, said Greater Bergen Realtors’ Amsel. He recalled the impact of the federal tax overhaul’s capping of the state and local tax deduction on federal tax returns at $10,000.
When the SALT cap took effect in 2018, New Jersey’s luxury market slowed down for a while. It picked back up eventually, Amsel said, because families realized New Jersey’s public schools are still worth the fatter tax bills.

If and when the nation brings the coronavirus under control, the state’s millionaires’ tax will become part of the calculus for wealthy buyers deciding whether to move back to New York City, according to Jeffrey Otteau, president of the Otteau Group.
“At that point, the housing market will need to stand on its own two legs,” Otteau said. “The increase in purchasing demand in the suburbs is going to normalize. It’s going to slow down a lot. And the more urban real estate markets are going to recover.”

David Goldsmith

All Powerful Moderator
Staff member
Suburban office demand spikes as working from home continues
Interest in Connecticut ‘burbs surged more than 40%, according to flex-office provider

Interest in small suburban offices is picking up as more people continue to work from home, and relocate outside of major urban centers.
For IWG, the short-term office company, deals for its downtown New York offices have collapsed by 30 percent since the virus outbreak, while activity in southern Connecticut has surged more than 40 percent, according to Bloomberg. Similarly, sales of small offices accommodating one to two people have jumped 19 percent.

IWG recently indicated that it would close up to 20 percent of its flex office spaces in Manhattan, as its Regus subsidiary puts locations throughout the city into Chapter 11 bankruptcy proceedings.

Still, the suburban migration is happening, and office landlords are responding. “This shows the current trend of buyers wanting more space — inside and outside of the house,” London-based analyst Iwona Hovenko of Bloomberg Intelligence told Bloomberg.

Few employees have returned to their offices in New York City: In Manhattan, just 10 percent of workers have so far made a comeback. Experts originally projected that 26 percent of employees would return to their offices by the end of the year.

David Goldsmith

All Powerful Moderator
Staff member
Real estate is a “four-letter word” in the capital markets: Sternlicht
Starwood's Q3 earnings up 8% YOY

Barry Sternlicht is confident the hotel and office markets will come back to pre-pandemic levels, saying that adults and kids “want to go back to the lives they had before.”
Still, the Starwood chairman and CEO criticized New York Mayor Bill de Blasio, without referring to him by name, saying the mayor is “bordering on insanity” as indoor dining remains restricted in the city.

“New York City is in a world of hurt. I’m really glad we don’t have exposure there,” Sternlicht said during Starwood Property Trust’s third quarter earnings call with analysts on Thursday morning. “We stayed away from those markets permanently because of the pressure on costs” and increases in real estate taxes.
Sternlicht made little mention of the election, but expects there to be a stimulus package regardless of who wins. That will propel people back to the office, he said, citing Facebook’s 730,000-square-foot lease at Vornado Realty Trust’s Farley Post Office redevelopment in New York.

“Don’t confuse pandemic behavior with the long-term social patterns of human beings,” Sternlicht said.
Miami Beach-based Starwood reported $151.8 million in third quarter earnings, or 52 cents per share, up 8 percent from the same period in 2019. The real estate investment trust reported $267.4 million in revenue for the third quarter, down 7 percent from $288.3 million in the third quarter of last year. The company’s stock rose 2.6 percent to $14.88 per share as of 11:50 a.m. Thursday, following the earnings call.
Starwood deployed $1.5 billion in the third quarter, and completed two debt raises totaling $600 million, said Rena Paniry, the company’s CFO. Starwood also reported $150 million in earnings for its commercial and residential lending portfolio.

Starwood has more than $880 million of cash and undrawn debt capacity, and Sternlicht said the REIT will keep about $450 million in liquidity. He referred to the company’s “huge earnings power” that it can harvest when needed.
“We’re not cowboys. We do think things could go wrong,” Sternlicht said, later adding that, “real estate is a four-letter word in the capital markers right now.”
Jeff DiModica, president and managing director, said the company is not forced to only invest in commercial real estate loans, and Sternlicht touted Starwood’s diversification.

“Although we are not out of the woods from Covid, we are very pleased,” DiModica said.
Sternicht was optimistic about the return of hospitality, and said he’s not concerned with increases in positive coronavirus cases because of improvements in testing.
“There will be a vaccine at some point,” he said. “There will be international travel at some point.”
Sternlicht, who previously said he planned to vote for former Vice President Joe Biden, made his only comments about the election when he signed off.

“I was going to say something like ‘May your favorite candidate win,’ but I don’t know who that is so… Have a good election.”

David Goldsmith

All Powerful Moderator
Staff member
Follow the renter: Multifamily investors pour capital into unexpected markets
Investors are following renters out of big cities and pouring capital into unexpected areas

In Albuquerque, New Mexico, multifamily occupancy is up. Memphis, Tennessee, is seeing rising rents, and cap rates for apartment assets in Detroit have spiked.
Months into a pandemic that eradicated many of the perks of big-city apartment living and made remote work a universal reality, renters have been moving to some unexpected places. And multifamily investors have been following them.

While initial lockdowns sent more affluent homeowners fleeing dense cities for weekend properties in the Hamptons and second homes, renters have recalibrated, too. That has been a boon for smaller cities, where space is more plentiful and rent is cheaper. Multifamily Investors, some of whom have fled what they see as too pro-tenant policies in states like California and New York, are beginning to shift their bets accordingly.
They’re now seeking out multifamily assets in far smaller markets. Among the most popular cities are Memphis and Albuquerque, where rents are lower but landlords can still expect to raise them each year.

Take Kushner Companies, which is extending its reach into the Sun Belt. The firm is making its first apartment acquisition in Memphis and has been eyeing other cities in the southeast. It is focusing on areas of job growth, such as those near logistics centers, a sector that has performed strongly in recent months.
Investor dollars have also been flowing to Detroit and Las Vegas.
Ben Teresa, who teaches real estate finance at Virginia Commonwealth University, said the strategy of capital favoring less-developed markets is one that’s generally seen during recessions.

“It certainly happened in the last economic cycle,” he said. “Investors would move into second- or third-tier markets after New York and San Francisco were saturated, and cap rates had become too low.”
Some of those smaller multifamily markets have even outperformed major metros in the third quarter, according to CBRE. It found that occupancy rates and rent prices rose in several of those markets — compared to New York, San Francisco and Chicago, where property owners are dangling concessions amid rising vacancies.
In-demand logistics centers are also boosting these emerging multifamily markets.

“We look to invest where corporations are relocating, and where housing is affordable,” said Russell Appel, principal at New York-based Praedium Group, which paid $90 million for a 385-unit apartment complex in Phoenix in September. “Rental housing is like an essential service — people need a place to live.”
Jay Lybik, a Phoenix-based researcher at Marcus & Millichap, said he has noticed a lot more interest in the Southwest with its proximity to California allowing it to attract renters who leave that state. Detroit, too, has seen more interest compared with last year, he said, and cities like Memphis are seeing more interest as companies expand logistics and warehouse centers.

“There are a number of cities in the Southwest and Southeast that have become strong distribution hubs — investors were seeing that trend pre-Covid, and they’re seeing that continued trend strengthen,” Lybik said, adding that employees in those distribution hubs have a “high propensity to rent.”
Here are four multifamily markets getting increasing attention from investors:
Detroit revs up
Detroit’s high cap rates for multifamily assets promise greater returns, said Nick Kirby, a director at local commercial brokerage Greystone Bel. He contrasted that to core urban markets, where he said that cap rates are so low a property owner “can break a window and lose money.”

Still, investors may be worried about reputational risk. Six years ago, Detroit emerged from the country’s biggest municipal bankruptcy with strict financial controls imposed in exchange for slashing a portion of its debt. The city also has a long history of racial inequality deepened by discriminatory lending practices and disinvestment. As manufacturing jobs vanished, white people fled for the suburbs beginning in the 1950s.
But the Motor City has performed surprisingly well during the pandemic. From March through September, net effective rents were up 3 percent, and vacancy decreased 100 basis points, according to CBRE. That has contributed to investor interest and kept Kirby busy, he said.

In mid-November, a 64-unit multifamily building he listed went into contract just days after the buyer — a local investment group — completed an on-site inspection.
Investors who are able to move quickly may also have another advantage in Detroit: The lack of access to financing has restricted new supply.
Also, lots of longtime, less sophisticated property owners may leave hundreds of thousands of dollars on the table when they decide to sell — which can be a boon for more savvy or opportunistic investors.
“You can get much higher cap rates” for existing multifamily assets, Lybik said. But it’s not for every investor, he added.

“It most likely has to be a very unconventional deal,” he said. “That turns off a number of investors — but for those who want to take a little more risk, it’s attractive in the long run.”
Some larger investors, too, are noticing an increase in demand for affordable multifamily housing.
Stuart Boesky, CEO of Pembrook Capital Management, said that after Amazon broke ground on a 823,000-square-foot distribution center where the Pontiac Silverdome once stood, the city’s public pension fund reached out. It had identified a shortage of housing for the employees and was making Pembrook aware of the opportunity.

“It’s certainly an issue,” Boesky said. “Rental housing is needed where these huge tech-oriented distribution centers are.”
Betting on Sin City
The Las Vegas market has benefited from its relative proximity to pricey and supply-constrained Silicon Valley. Vegas’ more affordable housing has seen it flourish in recent months, experts say.
The city had a positive absorption rate of 1.6 percent in the third quarter, according to CBRE. Net effective rents also rose, and the overall vacancy rate was down in September, compared to March. In Henderson, a suburb 16 miles from the Strip, the absorption rate increased to 4.3 percent. There, the average rent for an apartment is $1,300, compared with $1,400 nationwide.

Although multifamily rent collections declined 9 percent compared with pre-Covid levels, rent prices and occupancy levels both increased, according to a third-quarter report from Cushman & Wakefield.
Some recent deals include Benedict Canyon Realty’s acquisition of a 98-unit luxury apartment complex at 10620 West Alexander Road in July for $21 million. JB Partners, a private investment firm, acquired Tower at Tropicana at 6575 W. Tropicana Avenue and Gloria Park Villas at 3625 South Decatur Boulevard — not far from the Strip — for $82.5 million in August. The price was up from $62.5 million in 2017, when the assets last traded, public records show.

John Tippins, CEO of multifamily brokerage Northcap, said he’s seen a surge in renters coming from Silicon Valley and the San Francisco and Oakland areas.
“We’ve done some case studies of people who work at big tech companies who are paying $4,500 or $6,000 for a one-bedroom,” Tippins said. “Here, you can stay in the nicest three-bedroom or 3.5-bedroom home or apartment for $2,500 a month.”
Albuquerque shines

In May, when Gov. Michelle Lujan Grisham limited occupancy for university dorms across the state, apartment owners saw demand for their product spike. Desperate for digs, students poured into nearby properties, driving double-digit occupancy increases.
At the same time, multifamily broker Todd Clarke of NM Apartment Advisors said investors from coastal markets — frustrated with lockdowns in dense urban areas — have been calling, looking to move their families and their capital.
The payoff can be significant in Albuquerque, where the average cap rate is 6.62 percent, according to Colliers International’s third-quarter multifamily report. That follows a second quarter report — from CBRE — that found the vacancy rate in Albuquerque decreased while effective rents rose slightly.

A survey by moving company Hire a Helper from August showed that New Mexico saw a net population increase of 44 percent. That was the second highest percentage nationwide during the pandemic, the survey found, and in line with Albuquerque’s recent multifamily market churn, Clarke said.
“Property managers are telling us that occupancy is very tight,” he said. “We’re also seeing double-digit rent increases in some neighborhoods.”
Even with rent increases, those who come from more pricier cities may be startled when they find the average monthly rent in Albuquerque is only $900. That’s a strong motivator for tech workers freed from their Silicon Valley offices.

Tech giants have started taking notice. Facebook opened the first building in its data center in Los Lunas, a suburb to the south of Albuquerque, in 2019. Amazon is building a 465,000-square-foot fulfillment center, and Netflix bought a production studio in downtown for $31 million in 2018; it included a generous incentive package from the city and state.
“I feel bad telling people our business is booming and we’re doing so well,” Clarke said. “But when you live in Silicon Valley and you’ve got to rent your neighbor’s dog to have a legitimate reason to go outside — the wide open spaces, the Wild West, and people golfing, hiking and biking, which are not really limited at all by wearing a mask or staying socially distanced — it looks super attractive.”

A little more action in Memphis
Second-quarter effective rents actually rose in Memphis, according to CBRE.
In October, Kushner Companies — whose 20,000-unit apartment portfolio is East Coast-dominated — about $31 million for a 256-unit apartment complex in the Cordova neighborhood.
Kushner’s Riley Wilson, who led the acquisition, said the strong fundamentals of the Memphis market — diversified demographics, an educated workforce and a continued supply of jobs — drew the firm’s interest.
“We plan to continue our growth in these dynamic cities and build on a large scale over the next several months throughout the Southeast,” he said.

The Memphis area is also getting a boost from the industrial surge. Amazon said it would open its sixth fulfillment center in western Tennessee this year, with an 855,000-square-foot warehouse. FedEx, which is headquartered in Memphis, reported a 20 percent surge in revenue in the third quarter, the Memphis Business Journal reported, mostly due to the increase in online shopping brought on by the pandemic.
Logistics space expansion also led to job creation — mostly low-paying but stable.
“It’s very good for the rental market — a lot of the people working there will be renters,” said Steve Woodyard, CEO of multifamily brokerage Woodyard Realty. “The affordable housing side of that is really benefiting.”

Out of the 20 multifamily assets he has listed in Memphis, 15 are under contract — and he expected three more to follow in a matter of days.
And while New York and California both recently tightened existing limits on how much landlords can increase rent, Memphis has no such policy — at least for now.
“We’re getting a flood of New York and New Jersey investors because of rent control and recent law changes they’ve had,” Woodyard said. “They’re fearful they can’t maintain their buildings, and the rent can’t keep up.”

David Goldsmith

All Powerful Moderator
Staff member
Brace Yourself, New York
With legislative supermajorities in Albany, Democrats look poised to push the state even further leftward.

As if a second wave of Covid-19 infections weren’t enough, New York’s prospects for economic recovery will face new headwinds—from Albany.
When most of the state’s record 1.9 million mail-in ballots were finally counted this week, it became clear that the New York State Senate’s existing 40-member Democratic majority would grow by at least two seats—giving them their first-ever two-thirds supermajority of the 63-member chamber, enough to override gubernatorial vetoes.
The landmark comes two years after Democrats took control of the legislature’s upper house for only the third time since World War II. Combined with their long-standing supermajority in the 150-member assembly, legislative Democrats now are positioned to have the final word on New York State’s response to enormous state and local budget gaps created by the instant pandemic recession last spring.
As of November, Albany faced a budget shortfall of about $8 billion for the current fiscal year and $16.7 billion for 2022, which begins April 1. Allowing for Governor Cuomo’s habitual inflation of budget numbers, reduce those projected deficits by one-third and the outlook for Albany remains as difficult and challenging as it’s ever been. Federal aid, if and when it flows, will be only a temporary stopgap.
Over the past 25 years, the state government has become increasingly dependent on revenues generated in Manhattan offices and trading floors that remain largely vacant. Government spending, now running far ahead of even the most optimistic revenue projections, must adjust to new economic realities.
But economic reality doesn’t factor into the rising Albany worldview. On average, the state’s incoming class of legislators are more inclined to tax, spend, and regulate—and far from hesitating to impose more restrictions on a shaky economy, they see the pandemic-driven crisis as an opportunity to be exploited.
Months before the election, responding to Cuomo’s early warnings of major budget reductions, most incumbent Democrats in both houses had signed onto a union-backed call to “minimize devastating budget cuts” by “rais[ing] taxes on high wealth”—notwithstanding the already-disproportionate share of state and city taxes generated by the highest-earning 1 percent. Senate and Assembly rank-and-filers have introduced more than a dozen tax-hike proposals aimed at both individuals and corporations, starting with three bills raising the state’s 8.82 percent marginal tax on millionaire earners to as high as 10.32 percent (more than 14 percent in New York City) for “ultra-millionaires.” A one-house version of this measure has been passed repeatedly by Assembly Democrats in recent years.
Other tax proposals included a revived stock-transfer tax, higher property taxes on non-primary “pied-à-terre” homes valued at $5 million or more, and a “Billionaire Mark to Market” wealth tax, which its proponents claim would raise a whopping $23 billion in its first year. (The wealth tax would clearly violate New York’s Depression-era state constitutional prohibition of taxes on intangible property—which hasn’t stopped it from winning the support of New York’s most prominent urban progressive, Rep. Alexandria Ocasio-Cortez of Queens.)
Then there’s the ultimate article of faith of among a now-larger number of legislative Democrats: a state-run single-payer health plan, which would require massive tax increases all by itself.
So far, Governor Cuomo has resisted the call for tax hikes, pointing out that high earners could respond by moving away. Instead, he’s delayed significant budget cuts while continuing to demand federal aid to the state, New York City, other localities and, not least, the deficit-ridden Metropolitan Transportation Authority. By the same token, Cuomo warned again this week that if federal aid doesn’t materialize soon, he’ll resort to a combination of spending cuts, borrowing—and income-tax increases.
Asked how the Democrats’ Senate gains would change the balance of power in Albany, the governor replied, “supermajority or not, it doesn’t really make a difference.” He knows better, though. When legislators are in a position to neutralize gubernatorial vetoes, it makes a huge difference.
Just ask George Pataki, New York’s last Republican governor. During his third and final term, from 2003 through 2006, hundreds of Pataki’s line-item budget vetoes were overridden by an alliance of Assembly Democrats and Senate Republicans. In a bipartisan revolt led by Assembly Speaker Sheldon Silver and Senate Majority Leader Joseph Bruno, lawmakers added billions of dollars in spending to Pataki’s budget proposals (which weren’t exactly lean to begin with). They also raised New York State and New York City taxes by billions of dollars (temporarily, it turned out).
As Pataki’s experience shows, in a fiscal pinch, party labels and regional preferences matter much less than practical politics. New York legislators invariably have more incentive to spend without worrying about the long-term consequences, while governors, regardless of party, see an institutional self-interest in keeping a lid on the budget.
In 2020-21, members from New York City will continue to control a critical mass of votes in both houses, including seven new Assembly members who won primaries against senior members in Brooklyn, Queens, and the Bronx. Like their New York City colleagues, most incumbent and newly elected members of the Senate Democrats’ enlarged upstate contingent also lean left on fiscal issues, in particular. Resistance to a soak-the-rich tax agenda might come from members representing highly taxed, affluent downstate suburbs—although, like their Republican predecessors, these senators also will fight cuts in state aid to their lavishly well-funded school districts. In suburbs and upstate rural areas alike, it won’t be particularly hard even for moderates to resist spending cuts under the pretense that it’s better to stick “millionaires and billionaires” on Park Avenue with the bill.
New York owes its sky-high state and local tax burdens largely to the power of organized labor—and not just in the government sector. Unions representing health-care workers (and the nonprofit hospitals that employ them) are a huge obstacle to reining in the state’s bloated Medicaid budget, and the state building trades unions continually push for expansion of the misnamed “prevailing wage” law that drives up the cost of capital construction. In the next legislative session, those unions will have more clout than ever. Topping the list, as usual, will be New York State United Teachers (NYSUT), which has an obvious stake in preventing reductions to education spending, the largest category of the state budget and the driver of local taxes.
NYSUT and other unions provide logistical and financial backbone for a cluster of research and advocacy groups pushing for higher taxes. And labor’s influence isn’t confined to the Democratic Party: Senate Republicans for years nurtured their own cozy relationship with unions representing teachers, police, and municipal employees outside New York City, a big reason for their break with Pataki in the early 2000s. The much-diminished GOP will be counting more than ever on support from police unions, whose lavish contracts are a major factor in high suburban property taxes.
Millions of campaign dollars from NYSUT and other unions provided a counterbalance to a $5 million independent-expenditure campaign, backed by Ronald Lauder, that targeted first-term Senate Democrats for their support of criminal-justice reform measures including bail reform linked to New York’s recent crime wave. Breaking with the rest of public-sector organized labor, a coalition of police unions flanked Lauder’s campaign with endorsements of 15 Republican Senate candidates over members of what the cops termed the “anti-police, pro-criminal Democratic conference.” The New York City PBA alone spent $1 million in a campaign targeting the most vulnerable of Long Island’s first-term Senate Democrats.
Those efforts initially appeared to have yielded fruit for the GOP, based on Election Day results showing that Republicans had big enough leads to flip three Democrat-held seats on Long Island and another in Brooklyn. But Republican victory declarations were premature, failing to reckon with the impact of a new state law that vastly expanded mail-in balloting by adding fear of Covid to the list of permissible excuses for absentee voting. Normally averaging 2 percent of the total, absentees ended up accounting for 20 percent of the votes in most of the state—with Democrats capturing 70 percent or more of those votes in contested Senate districts.
As the absentee ballots were counted in the two weeks following Election Day, Republican Senate candidates saw their leads dwindle and disappear—culminating this week in the confirmed reelection of a first-term Westchester County senator who had faced a vigorous challenge from Rob Astorino, the former county executive and 2014 gubernatorial candidate. (A still-outstanding result in Onondaga County, where ballot-counting was delayed until Nov. 30 due to a Covid outbreak among election workers, could further bolster the Democratic majority to 43 members.)
The Democrats’ record numbers don’t necessarily mean that they’ll have the will or the discipline to unite behind a common agenda. Assembly Speaker Carl Heastie of the Bronx and Senator Majority Leader Andrea Stewart-Cousins, who represents a mixed urban-suburban cluster in lower Westchester County, aren’t nearly as entrenched or powerful as Silver or Bruno were in their heydays. And Cuomo continues to wield considerable executive power through his control of executive agencies and appointments and his constitutional authority to shape the terms of spending through budget appropriations language.
How strongly Cuomo pushes back against the progressive fiscal agenda remains to be seen. After taking office in 2011 as a fiscal centrist, at least by New York standards, he began in his second term to move steadily leftward on a range of fiscal and economic issues, advocating a $15 minimum wage, imposing one of the nation’s most costly zero-emission energy regulations, and, in 2019, baiting Democratic lawmakers into passing a broad statewide expansion of rent regulation.
Rather than fight any pitched budget-cutting battles that he might lose, Cuomo has behaved recently in ways suggesting that he’ll bend further left. His options will become clearer after the January 5 Georgia runoffs decide whether Republicans hold their U.S. Senate majority, which would mean less federal money and a more immediate fiscal crisis in New York.
Immediate fiscal challenges aside, there’s no understating the longer-term significance of New York’s new legislative supermajorities. For the first time in the federal Voting Rights Act era, Democrats will completely control the decennial redrawing of New York’s congressional and legislative district lines—which inevitably will move New York State further along the path to a New York City-style political monoculture.
When a blue wave flipped New York’s Senate two years ago, Senator Brad Hoylman of Manhattan made a prediction that increasingly looks clairvoyant.
“We’re going to be testing the limits of progressive possibilities,” he said. “I hope we look a lot more like California.”
Brace yourself, New Yorkers.

David Goldsmith

All Powerful Moderator
Staff member
While I'm not sure it's time to buy the city just yet I do think the activity and price increases in a number of suburbs has all the earmarks of a bubble that isn't sustainable.

The Most Splendid Housing Bubbles in America: Nov. Update
by Wolf Richter • Nov 24, 2020 • 268 Comments
A pandemic of house price inflation.
By Wolf Richter for WOLF STREET.
House prices jumped 7.0% across the US, according to the Case-Shiller Home Price Index released today. Other indices have indicated similar price surges. House prices are going nuts despite a terrible economy. They’re being fired up by low interest rates, $3 trillion in liquidity that the Fed threw at the markets, fear of inflation that drives people into hard assets, work-from-home that causes people to look for a larger place, the urge to-buy-now before putting the current home on the market, and a shift from rental apartments and condos in high-rise buildings to single-family houses. And condos, as we’ll see in a moment, are not universally hot.
Los Angeles House Prices:
House prices in the Los Angeles metro in September jumped by 1.3% from August and by 7.7% from September last year. They’re now 12.9% above the peak of the totally crazy Housing Bubble 1, have nearly doubled (+93%) since early 2012, and having more than tripled since January 2000 (+209%):

The Case-Shiller index was set at 100 for January 2000 across all 20 cities it covers. Today’s index value for Los Angeles of 309 means that house prices have surged 209% since January 2000. This makes Los Angeles the most splendid housing bubble on this list.

For Los Angeles, the Case-Shiller Index provides sub-indices for condos, and for high-, mid-, and low-tier segments of houses. In the low-tier segment (black line) – where people can least afford price increases – prices shot up 10.2% from September last year, having nearly quadrupled since January 2000 (+280%). During Housing Bubble 1, the low-tier surged the most, and during the Housing Bust, it plunged the most, -56% from peak to trough. High-tier prices (green line) have risen 7.6% year-over-year and are up 186% from January 2000:

The Case-Shiller Home Price Index avoids some of the distortions inherent in median-price and average-price indices because it is based on “sales pairs,” comparing the sales price of a house that sold in the current month to the price of the same house when it sold previously, and it does so going back decades. Today’s release for “September” is a rolling three-month average of closings that were entered into public records in July, August, and September. So that’s the timeframe we’re looking at.
San Diego House Prices:
The Case-Shiller Index for the San Diego metro jumped 1.8% in September from August and was up 9.5% from a year ago:

This is “House-Price Inflation”: Loss of purchasing power of the dollar.
Because the Case-Shiller Index compares the sales price of a house in the current month to the price of the same house when it sold previously, it tracks how many dollars it takes over time to buy the same house. In other words, it measures the purchasing power of the dollar with regards to houses. This makes the Case-Shiller Index a measure of “house-price inflation.” And that’s all this really is – the loss of purchasing power of the dollar with regards to houses.
San Francisco Bay Area:
House prices in the five-county San Francisco Bay Area – the counties of San Francisco, San Mateo (northern part of Silicon Valley), Alameda and Contra Costa (East Bay), and Marin (North Bay) – rose 1% in September from August and 6.0% from a year ago. The index has more than doubled since 2012 and nearly tripled since 2000:

But condo prices in the five-county Bay Area fell for the fourth month in a row and are down 2.3% from a year ago, and are back where they’d first been in March 2018. Condo prices in San Francisco itself have fallen much further amid a historic all-time record condo glut, with the median price down 12.8% year-over-year. But the Case-Shiller Index covers a vast area around the Bay, including those where San Francisco refugees are moving to, and some of them are seeing rising condo prices:

Seattle House Prices:
The Case-Shiller Index for the Seattle metro jumped 1.2% in September from August and 10.1% year-over-year. It has more than doubled since 2012 and exceeds the Housing Bubble 1 peak by 46%:

New York Condo Prices:
Case-Shiller’s area for its New York City index includes numerous counties in the states of New York, New Jersey, and Connecticut “with significant populations that commonly commute to New York City for employment purposes.” This area is far more diverse than Manhattan by itself. Condo prices in this vast metro have essentially been flat since September 2017 and are down 2% from the peak in October 2018:

Portland House Prices:
House prices in the Portland metro jumped 1.3% in August from September and 7.6% year-over-year and have doubled since 2012:

Miami House Prices:
House prices in the Miami metro rose 1.0% in September from August and by 5.6% from a year ago. The index is getting closer to its ludicrous Housing Bubble 1 high, lacking just 7.4%:

Tampa House Prices:
The Case-Shiller Index for the Tampa metro jumped 1.4% in September from August, and is up 7.5% year-over-year, and has thereby surpassed its prior crazy bubble peak of 2006:

Washington DC:
House prices in the Washington D.C. metro jumped 1.0% in September from August, and 7.0% year-over-year but are just a smidge shy of their Housing Bubble 1 peak:

Boston House Prices:
House prices in the Boston metro jumped 1.5% in September from August and 7.7% year-over-year:

Denver House Prices:
House prices in the Denver metro rose 0.6% in September from August and 6.0% year-over-year. Beautiful Housing Bubble 2, but not much of a Housing Bubble 1:

Phoenix House Prices:
House prices in the Phoenix metro soared 1.9% in September from August and 11.4% year-over-year, the hottest house price inflation of all the markets on this list of Splendid Housing Bubbles. But the index remains down 4% from its Housing Bubble 1 peak in 2006:

Las Vegas House Prices:
House prices in the Las Vegas metro rose 0.8% in September from August and 5.4% year-over-year. But they remain down 12.6% from their ludicrous Housing Bubble 1 peak:

Dallas House Prices:
The Case-Shiller Index for the Dallas metro – the counties of Collin, Dallas, Delta, Denton, Ellis, Hunt, Johnson, Kaufman, Parker, Rockwall, Tarrant, and Wise – rose 0.9% in September from August, and 2.6% year-over-year, the coolest house price inflation on this list of the most Splendid Housing Bubbles:

Dallas is also the last entry on this list, with house prices having “only” doubled since 2000 – meaning house price inflation of 100% in 20 years. The remaining cities in the 20-City Case-Shiller index have experienced house price inflation of less than 100% over the past 20 years and didn’t make the cut.

David Goldsmith

All Powerful Moderator
Staff member
Pandemic flight boosted or hurt these 20 cities
Cheaper living among top factors in where people moved to and from

Lower taxes and other financial perks may be drawing millionaires out of New York and California, but what about those who aren’t sending rockets to the moon? Studies say they too are moving, looking for larger homes and cheaper living.
Austin saw the most newcomers between April and October of this year. Next is Phoenix, Nashville and Tampa, according to Bloomberg. At the same time, San Francisco’s Bay Area and New York City lost people.

“Moving from a highly dense area to a less dense area allows people to potentially really enjoy some of their hobbies,” Josh Mungavin, a wealth manager at Evensky & Katz, told the publication. “Now people can chase their passions.”

Cost of living is a driving factor as expensive areas have seen the greatest exodus. Outbound moves in the Bay Area rose 8 percent in May through September, compared with the same period last year. Seattle and New York both experienced a 7 percent increase in departures, according to data from analytics firm Webster Pacific and United Van Lines.

Jacksonville, Raleigh, Charlotte, Nashville and Phoenix were among the cities with the most inbound moves over that time.
A haircut costs $23 in San Francisco and NYC, $27 in Chicago, $32 in Washington, D.C., and $35 in Boston, but just $15 in Phoenix and Tampa and $16 in Nashville, according to the Council for Community and Economic Research.

Overall, top outflows between April to October, according to ZIP code changes on LinkedIn, were from Hartford, San Francisco, New York City, Chicago, Cleveland, Norfolk, Boston, Detroit, Cincinnati and Pittsburgh.
Top inflows were to Austin, Phoenix, Nashville, Tampa, Jacksonville, Charlotte, Dallas, Denver, Charleston and Seattle.

David Goldsmith

All Powerful Moderator
Staff member
Pandemic flight boosted or hurt these 20 cities
Cheaper living among top factors in where people moved to and from

Lower taxes and other financial perks may be drawing millionaires out of New York and California, but what about those who aren’t sending rockets to the moon? Studies say they too are moving, looking for larger homes and cheaper living.
Austin saw the most newcomers between April and October of this year. Next is Phoenix, Nashville and Tampa, according to Bloomberg. At the same time, San Francisco’s Bay Area and New York City lost people.

“Moving from a highly dense area to a less dense area allows people to potentially really enjoy some of their hobbies,” Josh Mungavin, a wealth manager at Evensky & Katz, told the publication. “Now people can chase their passions.”

Cost of living is a driving factor as expensive areas have seen the greatest exodus. Outbound moves in the Bay Area rose 8 percent in May through September, compared with the same period last year. Seattle and New York both experienced a 7 percent increase in departures, according to data from analytics firm Webster Pacific and United Van Lines.

Jacksonville, Raleigh, Charlotte, Nashville and Phoenix were among the cities with the most inbound moves over that time.
A haircut costs $23 in San Francisco and NYC, $27 in Chicago, $32 in Washington, D.C., and $35 in Boston, but just $15 in Phoenix and Tampa and $16 in Nashville, according to the Council for Community and Economic Research.

Overall, top outflows between April to October, according to ZIP code changes on LinkedIn, were from Hartford, San Francisco, New York City, Chicago, Cleveland, Norfolk, Boston, Detroit, Cincinnati and Pittsburgh.
Top inflows were to Austin, Phoenix, Nashville, Tampa, Jacksonville, Charlotte, Dallas, Denver, Charleston and Seattle.