Okay, it’s no secret that since the pandemic began people have been moving out of New York City. Scaled up by civil unrest and the COVID 19 pandemic effects, moving out has been seen as the only viable option for NYC residents. The question is, does the outward movement pose a fatal threat to the real estate business in New York City? Is the migration permanent, or will there be a return to normalcy, in the sense that the moving population will come back? Different players in the real estate industry have perceived seasonal migration differently. For some, it might be the beginning of a permanent downscale for property prices. For others, it seems like a seasonal bump that will soon come to an end. In reality, it is just a phase in market development; the NYC real estate industry is NOT dead.
The pandemic ushered in a new era, with containment rules imposing social distancing, working from home for most sectors, and a generally new lifestyle, staying home and an increased online life. Staying in the city became a chore relative to staying in the suburbs. The difference was created with lower rent prices, low interest mortgages, more land and in turn house sales in the suburbs skyrocketing. For instance, Manhattan costs for leasing a mid end, two-bedroom apartment are valued at around $6,000 while the same goes at half the price in Brooklyn, or even lesser in Connecticut. For this reason, real estate clients saw it more appealing to buy or rent outside the city.
The confusion created by the paradigm shift in market preferences caused a misconception that the real estate industry in New York city is ailing and later believed to be dying. However, there should be a clear distinction between a seasonal hitch and a permanent breakdown. For one, neither the pandemic nor civil unrest is going to be permanent. The calm after the presidential election is a positive indication of a rejuvenated real estate market in New York. Although there are many positives and negatives that stem from either political side. Politics, on the other hand is a different conversation & one of our founders outlined a non-biased opinion in a video you can find here. Similarly, organizations are resuming a phased full reopening, creating a new increased need for city life.
Another indication of the New York market’s strength is that the suburbs are predominantly holiday and leisure places. For life, an inbred culture dictated a more relaxed environment upcountry while the city maintains the usual bustle. The earlier regression to a vacation mood ignited by the pandemic earlier in the past year cannot be more of a signpost for the full transformation from city life to country living, but rather a mild break from the norm.
It is imperative to note that though there was a general decrease in the preference of new York city as a residential real estate environment, there is still a permanent indication of people who are tied to new York city, especially in Queens and Staten island, due to family or work and other factors that may not be eliminated from the real estate business landscape. In essence, some people never moved and will not be moving, come the pandemic or not. In such a case, prices will either stagnate or go up but not down (for long). There may be continued turbulence, but death is off the table for the New York real estate industry.
