Pandemic-driven house frenzy hits local towns

Real estate. As New Yorkers head north, real estate up here is booming. Agents are on the hunt for houses to sell.

Sparta /
| 22 May 2020 | 02:02

Justin Melia and his family, who usually live in Astoria, Queens, closed in December on a vacation house in Warwick, N.Y., with four and a half acres for their toddler daughter to explore. He’s a marketing executive. His wife, who’s three months pregnant, works at an advertising agency.

“But since Covid we’ve completely shifted and are here, obviously, because New York is to some extent imploding – or was imploding,” said Melia. “And we plan on staying here for the foreseeable future.”

Before the pandemic, they’d come up on weekends to spread out and slow down. “I grew up in a one-bedroom apartment with four people,” said Melia. "It’s very different than having a 4,000-square-foot house with a bunch of bedrooms and four and a half acres."

They felt lucky to have found Warwick. “We were kind of shocked to see there was this really great town just over an hour outside the city that kind of had everything you’d be looking for: land, good schools, ‘cause you never know in the future what your plans might be, as well as a nice downtown, shopping area, got a little bit of that farm vibe to it," he said.

Now their vacation house feels like a lifeboat. “I don’t know what we would do right now, frankly,” said Melia. “We have a house in Astoria, but to be cooped up and be around that many people at this time would be a little challenging.” Another city friend is sticking it out in Kentucky with his girlfriend until things settle down, said Melia, because “why live in New York right now when New York isn’t New York?”

Melia and his growing family are part of what some are calling a post-pandemic exodus from the city. “We’re seeing a movement, people coming from New York City and surrounding areas and heading out our way,” said Dawn Corbo of Weichert Realtors in Sparta, N.J. “That lower end of Sussex County is very busy right now, people coming out, exploring, people doing their homework.” In New Jersey, agents are allowed to do in-person showings following Centers for Disease Control (CDC) guidelines that include masks, gloves, shoe coverings, and distancing.

“The showings that we’re having are buyers. There’s not a lot of lookers,” said Corbo, who has four offers for one of her listings. She said she has a buyer "coming back out tomorrow” from the city. “They have three small children," she said. "They feel like they’re boxed in. They’re looking for a different lifestyle to raise their family. And they’re willing to take on the commuting distance, the time on the road, to have a lifestyle that they’ve been wanting but had never done it.”

Do you want to sell?

The demand for houses in the country is bumping up against a historic housing shortage, an imbalance that’s creating a definite seller’s market. “We don’t have enough houses to sell,” said Corbo, who’s been in real estate for 28 years. “I need houses, that’s my new thing. I need houses to sell. I’m out searching for them. I am also making calls to people and asking them if they want to sell their house. I have to right now. That’s what we do for a living. Our inventory is at the lowest it’s been in a very, very, very long time.”

At first, the pandemic’s unknowns made people hesitant to list their houses, said Corbo. But all the pieces are functioning, from showings to home inspections to moving trucks, she said. “If there was a house that had a challenge, that didn’t sell before, this is a very good market to get your property on the market to be sold,” said Corbo. “There’s less competition right now.”

Some prospective buyers are coming up from the city with their own real estate agent in tow, which is unusual, perhaps a symptom of the depressed real estate market in the city. Normally, a city agent would call a local agent to take their buyer and show them around. Corbo has been stopping by those showings anyway. “At first they look at you like who the hell are you?” she said, but she just says she’ll hang out in case there are questions – and there always are, about the schools, the recreational trails, the grocery store, things the out-of-area agent can’t answer. “Let me tell you something, I’m selling my own houses that way,” she said.

Rachael Heiss, Warwick branch manager at Better Homes and Gardens Rand Realty, said they're seeing bidding wars. "We are actually seeing properties selling for over their asking price,” she said. “It could just be the spring market, but it could also have to do with the pandemic."

Heiss' office has also been fielding an unprecedented number of requests for seasonal rentals – furnished, for about three months. People are looking for “real retreat-type places with swimming pools, or places on the lake, in Greenwood Lake,” she said. “That would be a scenario that we can’t keep on the shelf.” Renters may just be looking to get out of the city until things shake out, or they might be using the time as a trial run to feel out the area and see if it’s somewhere they’d like to live.

“I have been also hearing there have been slim pickings on Airbnb rentals,” said Heiss. "That may be because they’re all getting booked, or their owners are using them themselves to escape the city, or that people “just aren’t opening them up because they may not want to deal with any new sanitizing regulations and things like that that they might have to do in between."

Home offices are hot

Initially, the shutdown put the kibosh on all real estate activity in New York, which caused some moments of panic. "We didn’t really know how we could conduct our jobs if we couldn’t even go to a property and take a picture,” said Heiss. But after a few weeks, New York realtors were allowed to do things virtually, like conduct open houses over Zoom, although they still can’t do in-person showings. “It’s hard to tell if it’s the pandemic or if it’s the timing with the spring market,” she said, but people started biting.

“From Brooklyn we’re getting phone calls, we’re getting from Manhattan,” said Heiss. “We’re seeing the offers that are coming in. It’s not all New York City, but there has been quite a bit.” Once they’re able to do in-person showings again, whenever that might be, “it’s going to open up a little bit more,” Heiss expects. “I kind of think of it as a faucet – it was open, and then it was completely turned shut, and now it’s just opening little by little and more is coming out of it.”

In those virtual open houses, there’s one room in which agents are learning to linger. “The home office is now such a more prominent feature for us to highlight,” said Heiss. “In the past, I think people just kind of dismissed it. It was like, oh, that’s an office, well I’m not ever going to really use that. I’m just going to sit at the kitchen counter if I need to do something. But now people are coveting the home-office much more, because of the whole telecommuting option."

She’s one them. “I bought a desk from Target online, and I set it up in one of the rooms of the house," she said. "I was working at the kitchen counter but it didn’t cut it. You know, the thing about being in the kitchen is you’re in the kitchen,” she laughed, “so all the food is there too.”

Let loose from their offices, New York City workers are likely to stray outside of city limits. Melia and his family, for instance, are still planning to return the city at some point, “because our jobs are heavily tethered there,” he said. “But it’s all contingent upon the working remote element. If we could work remotely, exclusively, then maybe not.” Their vacation house has “definitely become more of an option for a full-time residence.”

Melia already had the option to work remotely now and then – if his daughter was sick, say. “But I would say 95 percent of the time I was in the office," he said. I think that’s going to shift, significantly. I think most people are probably going to be able to work from home, probably 75 percent of the time. There will be certain roles where they’ll want you to come in, just to build company culture, things like that, but my guess would be that’s going to shift significantly. I think people are going to value the ability to work from home, that it will become like a company benefit no different than healthcare, or a 401K, or gym reimbursement or any of the other benefits that a lot of companies nowadays are starting to showcase.”

Big houses are back

In a survey by the real estate company Redfin, more than 60 percent of New Yorkers said they’d move if they could work remotely. New York workers were by far the most eager to relocate, beating out Boston, San Francisco, and Seattle for the distinction of least enamored of the city they call home.

“We have seen the hinges being blown off the doors,” said Charles Petersheim, whose company, Catskill Farms, builds second homes in upstate New York specifically for city buyers. “Let’s just say it’s not a positive thing anymore, how many I see,” he said, of the requests coming in from his website. “It’s a daunting task to respond to them each morning in a professional manner. We’re probably seeing a ten-fold increase in requests.”

His existing houses have been snatched up, and he’s got nothing left to sell. “We’re kind of queuing up for what we can deliver over the next six to 12 months,” he said, “which is a little uncertain too because a lot of these towns aren’t open for construction. Inventory is scarce, it’s getting scarcer, and buyers are increasing. So it’s creating a perfect storm of awfulness for buyers, and a relatively good environment for sellers.”

Petersheim had been building smaller homes of late, and now he’s kicking himself. “I was getting more conservative and shrinking the size of our homes," he said. "That was good before the virus, but now post-virus, we could have had a whole different selection of homes out there.” With people camped out indefinitely in their “non-primary homes,” they’re looking for three or four bedrooms and two-and-a-half baths, he said. “What’s fun for 48 hours isn’t fun for 45 days.”

In addition to larger houses, city buyers are also newly focused on schools and broadband internet, which can be spotty upstate. “What the exodus will look like will be driven by metrics we’re not used to,” he said. “People that buy in the Catskills typically don’t give a rat’s ass about schools because they’re not sending their kids to the school.”

Lack of fast internet might be quaint for a weekend, “but not to have it in your primary home when you’re working from home? That’s a dead-stop,” said Petersheim. “You’re not to trade or upload videos or do Zoom on satellite or DSL, not consistently.” He wonders whether the push for expanding broadband might get the boost it has long needed, with the northward migration of savvy New Yorkers. “As a second home owner, you kind of don’t have time to be politically active, but if all of a sudden you are up there...”

Petersheim fled the city after 9/11 and bought his first house in Sullivan County for $24,000. He has since built 250 homes specifically meant as country retreats for city dwellers. “I think every single person that owns our homes are now using them,” he said. Terrible as 9/11 was, Petersheim thinks the pandemic will hit the average New Yorker harder than that tragedy did. “I felt this had a much more deep knife cut across a cross-section of New York City residents,” he said.

The 'four season vacation'

Davis R. Chant, owner of Davis R. Chant Realtors in northeast Pennsylvania, also compares this moment to 9/11. The difference was that on September 12, “if you were in Manhattan you could come up here and look at property. Right now we’ve been under restriction where we couldn’t really do that,” he said. “We could send them information, pictures that we might have had prior to the restrictions going in place.”

Chant’s 100 agents have found themselves in a strange holding pattern. Despite the surge in interest, real estate was deemed nonessential in Pennsylvania – the only state to completely shut down its housing market. On May 19, realtors were given the green light to conduct limited business. Guidelines had yet to be handed down from the Pennsylvania Association of Realtors when we spoke, but Chant hoped showings would be able to resume the next day. Once that happened, he said he was “very very optimistic that the rest of this year could be very productive.”

Running his agency for 55 years, Chant has watched Pike County go from mostly second and retirement homes to being a vibrant year-round community of people who commute to jobs that have crept closer – to the Hudson Valley and New Jersey. Families are drawn to the “four-season vacation” vibe, he said. You can get home from work and play nine holes of golf this time of year. In January, you can take the kids skiing at one of the local slopes that’s open until nine.

Now, as behemoth firms announce one after another that remote work will be the norm going forward, office workers from metro New York, New Jersey, and Philadelphia can actually consider living as far away as Pike County, Pa. “Many of them are saying, you know, really, all I have to do maybe is go back into my office one or two days a week, and I can work from home the rest of the time,” Chant said. “They can take a train from Port Jervis, or a bus from Milford or Port Jervis, they can drive down to the Route 80 corridor and catch a train down there or a bus, or whatever it is. But I think that we’re going to see some changes, because I’ve heard from several people that some of the companies that had tremendous office space in Manhattan, they came to the conclusion: we don’t need all this office space. These people can work out of their home.”

Indeed, New York City’s three biggest commercial tenants — the banks Barclays, JP Morgan Chase, and Morgan Stanley, which collectively employ tens of thousands of workers in towers across Manhattan – each said it was unlikely that all their workers would ever return to those offices, The New York Times reported on May 12.

“So I think there’s going to be a lot of positive changes for us, people in the real estate business and people who want to sell their homes, builders and so on,” said Chant. "Even though the virus problem isn’t over, I just think the general economic situation is going to go into very much an improving cycle."

“The inquiries that we’ve been getting – and there have been a lot of them – have been people who, you know, were serious,” said Chant. “Many of them are contacting local mortgage or brokers and banks, getting their mortgages lined up so when they do come and start looking, they’ll be ready to go."

Tristate real estate regs for the COVID-19 era
New Jersey. Real estate is considered an essential retail business in New Jersey. Agents may only show houses one-on-one, as long as all required safety precautions are taken. Open houses are prohibited.
New York. Real estate activity is virtual-only activity in New York. The New York State Association of Realtors, the state’s largest real estate trade organization, on May 6 sent the governor suggested guidelines for reopening.
Pennsylvania. In-person showings resumed in Pennsylvania on May 19. They must be scheduled by appointment and be limited to one real estate agent and two others inside a property at one time. Agents and clients must travel separately.
“I need houses. I need houses to sell, and I’m out searching for them.” - -Dawn Corbo