This article was originally published on Christie’s International Real Estate’s blog Luxury Defined.
Many families, their housing needs altered by the pandemic caused by Covid-19, may be now considering moving out of high-density urban areas. Brian Meier, a principal of the Meier Estates & Ventures Team at Christie’s International Real Estate’s New York City brokerage, and his colleague Catherine Juracich suggest how it might be done.
Catherine Juracich says she is seeing New York City families with school-age children express a desire to move away. Many of these families send their children to private schools, so they are currently remote learning and feel some uncertainty about whether their children will return to the classroom in the fall. Should they return their children to that distance learning-private school model? That is especially the question in New York City, which has some of the most expensive private schools in the United States.
“Many New York City-based families I know have been living in their second homes or rental properties in areas such as the Hamptons; Martha’s Vineyard; and Palm Beach, Florida, since March,” says Juracich. “For the first time, many have had an opportunity to live outside the city for an extended period. They are seeing the benefits of a family-oriented lifestyle in the suburbs. Some have gone south and have come to appreciate the warmer weather. Others have discovered the wide-open spaces and large estates available in the New York tri-state area and are now looking to relocate to primary markets such as Westchester and Nassau Counties in New York; Northern New Jersey; and Connecticut.”
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There’s also the financial component of big city living: “The economic impact of the pandemic has many people concerned financially, and one of easiest ways to cut down on costs as a family is to leave New York City,” Juracich adds.
Brian Meier is talking to brokers outside the city, who say that many families from New York City are leaving in a rush so that they can buy a home now, move in over the summer, and be situated before the new school term begins in September. Meier says, “The issue is how to plan their exit. Should they rent or sell their current property—because we’re in an unprecedented economic environment.”
Brian Meier speaks to an audience during his weekly podcast, Block and Lot with Brian and Kate Meier, a look inside what’s actually going on in New York City Real Estate.
Do I Have Enough Time to Move and Settle in Before My Child Starts a New School in September?
In most cases, it’s entirely possible to move before the new school term. Applications to most private schools had deadlines on March 31, but many of them are extending deadlines due to the current situation. If you’re looking to make a move and buy a property in your new location, it could take anywhere from 60 to 120 days to close on a single-family home, which should give you more than enough time to make that move. If you’ve decided to rent a home outside New York City, then this will take even less time. Right now, you do have enough time to move, but come June or July the schools could be full, the real estate inventory in those places may become limited, and you might not have enough time to be settled in that new location.
How Can I Know If I Should Sell or Lease My Home?
Individual circumstances differ. If you don’t need to sell right now, perhaps leasing is a better option. You should consider the type of property. If your decision is purely economic, there are some markets that will fare better than others in the next one to three months. Right now a three-bedroom apartment on the Upper East Side could be very difficult to lease. There are not many people moving into those types of properties, whereas a two-bedroom in Tribeca would be much more desirable. If you are going to lease, you might be looking at a two- to three-year horizon before the property price returns to where you might want to sell . You also have to be able to carry an additional mortgage if you’re financing a new home outside the city. Many lending institutions have put restrictions on mortgages on multiple homes. You have to speak with your financial advisor to understand the cost of those situations so that you can make a decision that is best for you. There are at least two things that will hold people back from selling:
1. If they want to keep a foothold in Manhattan.
2. That they won’t get the sale price they want today.
On this latter point, there is a very good chance that you will sell for more in the next two to four months than you will in the next one to two years if we go into a recession. Based on 9/11 and the financial crisis of 2008, selling a home three months after a crisis was better than nine months after, because the market tails down after a recession.
If I Want to Move in September, When Should I Put My House on the Market?
If you’re thinking of selling, you should put your property on the market a good 60 days before you vacate. It could take three to six months to find a buyer and another three months (between the co-op or condo board and the banks) to schedule a closing. It’s best to have it on the market as soon as possible. Your New York City property may sit vacant for some time, which will bring in costs and upkeep. So for that reason, I would aim to have it on the market sooner rather than later.
“Of course, the realtor has to time the sale with both the current restrictions (not many buyers are in the market now due to the stay-at-home order) and for when those buyers come back to the market, which I project to be in June,” says Meier. Buyers should spend this time talking to their broker, adds Juracich. In a down market, buyers are more particular about any issues with regard to valuations. Ask questions. Is there anything you will need to do to your residence to prepare it for sale?
Another factor to consider is that real estate marketing has changed. Additional steps that need to be taken in the selling process include mapping out a home for a 3D virtual tour and virtual floor plans to complete the marketing. There may be an initial push in the market, with buyers sitting on the sidelines for two to three months anxious to purchase something, and that may cause a fair amount of traffic to sign contracts in the early summer months.
Online traffic at Christie’s International Real Estate’s website is greater now than before the broad stay-at-home orders hit. Many buyers are window shopping, which in any normal year would generally occur in November and December. “Buyers are engaging with us. It’s important to note that the properties on the market that are being browsed today will be the ones that are sold tomorrow,” Meier says.
It is important for sellers to go with a firm that values technology, such as 3D virtual tours. It’s important that realtors are transparent when it comes to projecting valuations, and acknowledge that the art of it remains uncertain.
“I would advise you to put your property on the market by mid-May,” Meier says, “so potential buyers can start seeing the property in June, many of which will have seen the property in a virtual tour. It’s achievable —if you start now.”
When Should I Start Looking for a New Property to Buy or Rent?
Don’t make a move under pressure. Engage now. The busiest buying market in the suburbs is in the summer.
There is a line of communication between realtors that has never been seen before. The community of New York City brokers has come together to promote their properties. There are more realtors and buyers learning about what’s going on in the market. There are panels and news discussions. We are using that world of information to communicate to the real estate and home-buyer community. Realtors are also using grassroots platforms such as real estate vlogs. In fact, we have a Chelsea penthouse listing at the Fitzroy, which we are showcasing on a widely viewed real estate vlog.
What Should I Look Out for When Selling My Property? What Are the Difficulties? How Can I Show My Home in the Best Light?
Currently, it is difficult for sellers in New York City to show their property, and sales transacted virtually have their limitations. While the New York statewide stay-at-home order expires May 15, this may still present challenges for cautious buyers and those traveling from overseas, and this date likely will not apply to New York City. “I don’t see an open house happening in New York City this year. I don’t see an owner wanting 20, 40, 60 buyers walking into their apartment,” notes Meier. We are going to have to work in a “slightly” virtual world, which is good, but it may slow down the process. Going virtual helps buyers to see more properties, and rule out those they are not interested in before having to travel to view them. But it does slow the selling process, and buyers have to be prepared for that.
“Make sure your realtor provides virtual tours. If they can’t give you a virtual tour, it’s a red flag that signals they are not moving with the market. Have your realtor give you a virtual tour, so you can see how they sell in a virtual environment, which they can use as a currency going forward,” Juracich advises. “We’ve seen good virtual tours and bad virtual tours. Not everyone is hiring experts in this field. Many of the free options available are of a low standard,” adds Meier.
Brokers should go with the client on the virtual tour in real time. You can’t forward clients a virtual tour of a 6,000-square-foot townhouse and expect them to figure it out for themselves. You have to walk them through the tour and narrate it for them just as you would in a real-world showing to tell a client in real time about the quality of the finishes, the height of the ceiling, or what the views are like.
What Are the Challenges When Leasing a Home?
Just as with selling, it’s important to choose the right leasing agent. The agent you choose to lease your home will most likely be the one who will sell it. Be as serious about your rental agent as your sales agent: They will oversee the management of your rental property. An experienced team handles around 100 rental properties a year and oversees each rental unit. “We work with buyers, sellers, and homeowners who lease their properties. We help homeowners market their property, run background checks on tenants, manage the rental during the duration of the lease, write leases and renewals, and assist with move-ins and move-outs,” says Meier. A good broker will provide a road map for each avenue, whether leasing or selling, including the tax benefits and ramifications, and all the factors that help them make the decision that is right for them. A good broker will focus on what their client is looking for and help them to understand the full horizon.
How Can I Show My Home at All Given That In-Person Showings Are Not Allowed? Is There a Way Someone Can See it Without Coming to the Building?
In New York City, showings will most likely commence in June. Meanwhile, we are increasingly reliant on new technology, especially the agent-guided virtual tour.
What’s Different About the Virtual Tour and How Are You Using It?
You don’t have direct eye contact, you’re sharing a screen. It’s a new forum. It’s not something you may have talked to a realtor about before. And some realtors may not be comfortable using the technology. For the immediate future, we are going to be living in a partial virtual tour reality of real estate showings. Some buyers enjoy virtual tours; for example, they like the measuring tool, being able to go back to view the tour privately, or seeing five properties in an hour. It’s a particularly strong benefit for overseas clients. We also do about five Zoom calls a day with our clients and our brokerage team. Virtual tours also work well for rentals; many will be rented sight unseen, because it’s less of a commitment.
How Is the Market Looking Now for Buyers and Sellers? Do You Foresee Any Market Correction in the Near Term?
Things are uncertain. No one knows for sure what the market will do, but if you look at the circumstances from previous downturns there are suggestions. Based on previous downturns, such as the financial crisis of 2008, we can speculate that there could be a price correction of between 1 percent or 30 percent. Both buyers and sellers want to wait to see what it will be before they make their move. Sellers don’t want to sell at a 20 percent discount if the discount is only going to be 5 percent; buyers don’t want to buy at a 5 percent discount if it’s going to be 20 percent. The factors that are causing that have yet to be fulfilled. These are unprecedented times and we are still in the midst of it. If the stay-at-home order continues and unemployment grows, then that reduction in value is going to keep growing. If we’re back in our offices in June, and the economy gets rolling, then the recovery could be a V rather than a U-shaped curve. However, one thing we do know is that during uncertain times, it is a great time to buy. This summer market will be better than six months from now.
It’s a good time to rent or buy in New York City. If you’re liquidating, and you’re buying something for a lower value outside the city, it’s a great time to use that money to buy something smaller to keep a foothold in the city. Meier says, “One of my clients is currently looking to buy an apartment for his son who wants to go to New York University—in six years’ time (his son is 12 years old). The market will rebound, and in six years that apartment will be 50 percent more expensive than it is now.”
Have You Closed Any Sales in the Last 30 Days?
Our team has had three listings close in the last 30 days. There have been a few New York City homes that closed in the last month. Most, however, were in contract before New York’s statewide stay-at-home order went into effect on March 22. Since then, we have had three to four signed contracts.
Can the Selling Process Be Completed Going Forward?
Every week the process gets easier. While we can’t guarantee it, by the time you want to sell your property, we should be closer to normal.