New York's Cooperative and Condominium Community

Habitat Magazine October 2020 free digital issue

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CO-OP/CONDO BUYERS

WHAT CO-OP/CONDO BUYERS NEED TO KNOW

Exodus to the Suburbs Reaching “Insane” Levels

New York City

Suburban exodus, declining apartment sales in Manhattan, COVID-19, co-ops and condos.
Sept. 4, 2020

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, The New York Times reports. The implications of this exodus for the city’s housing cooperatives and condominiums is still unknown but sure to be vast. Likewise for the services that are supported by the city’s dwindling tax revenues

In July, there was a 44% 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 a staggering 112% in Westchester County, just north of the city. At the same time, according to Miller Samuel, the number of properties sold in Manhattan plummeted 56%. It adds up to an exodus that analysts say is reminiscent of the one that fueled the suburbanization of America in the second half of the 20th century.

“The people from New York are coming with a sense of urgency, and the thing they want is space,” says James Hughes, a real estate agent in New Jersey, who added that roughly 60% of potential buyers for his properties live in the city. “The demand is insane.”

The insanity features crowded open houses, multiple offers and bids above asking prices – former fixtures in the city’s real-estate landscape that are now distant memories. 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 and other cities for the suburbs for decades, especially to bring up children in towns with strong public schools, or to escape a sagging urban economy or soaring crime rates. And while it’s 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, 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.

And that can’t possibly be good news for the city’s co-ops and condos, which face severe budget challenges as residents flee, as city services get cut back, as new regulations continue to arrive while property tax reform remains stalled by the pandemic and political inertia.

The flight out of New York City could inhibit the city’s economic recovery and its ability to maintain quality-of-life services such as police and sanitation, says 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,” she says. “To lose them would really represent a blow to the budget.”

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