Wealthy New Yorkers Fled the City Due To Virus: Will Their Exodus Be Permanent?

No. New Yorkers like the action - the arts, the restaurants, the people - and they recognize the city is one of the best places to make a lot of money and be recognized.

In addition, access to good health care is clearly crucial and most outlying areas dont have that. But this may ignite a resurgence of interest in the suburbs, as quarantining reinforces the notion that space matters when the family is altogether. JL

Virginia Smith reports in Mansions Global:

Once this is over, you’re going to see a surge in suburban sales. But a lot of traditional vacation spots may not. They don’t have good medical facilities. (And) buyers coming off their home becoming their entire family’s office, gym, school and recreation area are now coming to searches with a heightened appreciation for space. Buyers who rush to get out of the city may walk back that decision after the crisis has passed. "Every conversation my agents have had with clients revolves around wanting to be connected with New York City. That hasn’t changed.”

Nearly the moment the first coronavirus cases were reported in New York City, well-off city dwellers began plotting their escapes, heading to second properties usually reserved for seasonal summer residences, and flooding the market for nearby vacation rentals.

The effect was so dramatic that in areas like the Hamptons and Cape Cod, locals bristled at the influx of New Yorkers putting a strain on local resources (and potentially spreading the virus), and some local officials even warned would-be visitors to stay away.

At the same time, well-off suburbs in areas like Greenwich, Connecticut, and Westchester County in New York, which had been relatively sluggish in recent years, quietly recorded strong performances in the first quarter, with few signs of slowing down.

Suburban Markets Show Strength as the Virus Spreads

First quarter data compiled by Berkshire Hathaway New England showed a 36.5% year-over-year increase in Greenwich home sales for the quarter, with March alone recording a 22.2% increase in spite of the arrival of the coronavirus in New York. Between March 1 and the first week of April, the firm recorded a 29% increase in sales compared to the same period in 2019.

This rush of activity comes after a period of stagnation for Greenwich, which was hit particularly hard by recent changes to tax laws and mortgage deductions.

“We really saw in the $800,000 to $3 million range that had a significant impact,” Berkshire Hathaway sales executive Mark Pruner said. “People’s monthly payments were going up because they were having to pay their mortgage with after-tax dollars.”

At the beginning of 2020, though, favorable new mortgage rates helped turn the tide and bring in buyers who’d previously been sitting on the sidelines. “The year started out gangbusters, with low interest rates and motivated buyers,” Mr. Pruner said. “We were off to a very good start before the virus hit, and continue to do better than last year [in spite of it].”

More: It’s Time for Home Buyers to Drive a Hard Bargain

A first quarter report for Westchester, Putnam, and Dutchess counties released by Douglas Elliman on Thursday also showed growth, albeit in more modest numbers, with median sales prices for single-family homes rising by 6.7% year-over-year, and sales in the same category increasing by 7.5%.

“Initially there was a large uptick in [calls about] short-term rentals, then longer-term rentals,” said Scott Elwell, Douglas Elliman regional vice president of sales for Westchester and New England. “Now we’re getting calls from families in the city inquiring about purchasing.”

With families eyeing moves tied to the start of the next school year, spring already tends to be a particularly busy season for suburban buyers. “You have people who look in the spring to have their kids off to school by Labor Day,” Mr. Elwell said. “That time frame still exists irrelevant of everything that’s happening.”

For prospective buyers reacting specifically to the threat of coronavirus in New York City, suburban infrastructure may also hold a stronger appeal than what’s available in a typical vacation town.

“The general consensus is once this is over, you’re going to see a big surge in sales,” Mr. Pruner said. “But a lot of the traditional vacation spots may not necessarily see that. One of the issues is that they don’t necessarily have good medical facilities—even if you own a big house there, they don’t have the hospital or the resources”to go with it.

Increased Interest in Extra Space (and Office Space)

Though tastes have been trending toward smaller homes in recent years, buyers coming off the experience of their home suddenly becoming their entire family’s office, gym, school and recreation area are unsurprisingly now coming to their searches with a heightened appreciation for space, a fact that could bode well for suburban markets.

“Questions about whether or not a house has an office have been higher up on the list,” Mr.Elwell said. “When my agents walk through with clients, this is anecdotal, but office space and layout are a bigger part of the conversation, which is something that’s been different from previous years.”

This is particularly true for short-term renters.

“At this moment, instead of ‘location, location, location, it really is about ‘what’s on the property,’ because you’re not going to be leaving that,” Mr. Pruner said. “People are much more interested in the amenities.”

In the longer term, buyers who suddenly feel more comfortable working from home may look to areas with an easy commute to New York City with the knowledge that they can easily telecommute the majority of the time, and head into physical offices as needed, when things return back to normal.

“Overall, I think people are going to come out of this and realize that it’s possible to work virtually, maybe not full time, but part time,” said Shahab Karmely, founder of New York-based KAR properties. “I think that is going to drive a move by people to these outer areas, and that’s going to work in favor of markets like this.”

New Buyers and Increased Interest

Though short-term interest is likely to remain strong until the virus is under control and social distancing measures have been lifted in New York City, for the most part, interest from buyers looking to make a purchase outside the city seems largely to be coming from those who were already planning to make the jump.

“Some people might look here [for short-term rentals] and start to think this might be a better place for their permanent residence or second home,” said Robin Kencel, a Greenwich-based broker with Compass. “I’ve had other calls where people were thinking about moving out of the city but what’s going on has moved up their timetable.”

And buyers who rush to get out of the city permanently may find themselves walking back that decision after the current crisis has passed.

“It’s hard to say, because none of us have ever gone through something like this before,” said Ann Conroy, CEO of Douglas Elliman Long Island. “But after 9/11, for example, buying trends did shift. I had friends who moved out to the Hamptons permanently, they thought, and little by little they trickled back to the city. People who love the city, if they’re not ready and force themselves out, they come back to the way they love to live.”

Ultimately, it will be difficult to forecast buyer behavior until the longer-term impact of the virus on the economy and the overall housing market becomes more clear.

For the time being, however, suburbs and commuter towns have one distinct advantage over farther flung vacation destinations. “The one thing I can say is that every conversation my agents have had with clients revolves around wanting to be connected with New York City,” Mr. Elwell said. “That tenor hasn’t changed at all.”