“When you go from a $3 million apartment to a $3 million home, you triple or quadruple your space,” real estate consultancy Otteau Valuation Group said while referring to pandemic-weary city dwellers fleeing Manhattan to spacious New Jersey communities. “You really don’t care if the mayor shuts down the beaches, or the mayor shuts down the parks because you’ve got all that in your backyard.”
The exodus of wealthy people fleeing Manhattan and other parts of New York City is expected to be a boon for Bergen, Essex, Union, and Middlesex counties, located in New Jersey, noted Bloomberg, citing an Otteau report.
Jeffrey Otteau, president of the firm, forecasts single-family home prices this year will slump in the New Jersey counties mentioned above but could see a surge in price by at least 6% in 2021, would be one of the most significant annual increases since 2005, due mostly to the trend gain in momentum of people fleeing the big city for the comfort of suburbia.
“This looks like the 1970s, which was a time when people were leaving the cities,” Otteau said. “You had tremendous growth in places like Long Island and Westchester County, at the expense of the Manhattan economy.”
The breaking point for many Manhattanites was three months of lockdowns, followed by weeks of social unrest. It appears urban revival is about to abruptly reverse as folks seek rural communities and small towns to isolate from an imploding inner city.
Reduced demand and oversupplied conditions will pressure urban home prices in the city. The opposite, of course, will happen outside in surrounding counties. We mentioned this on Wednesday in a piece titled “Housing Market Outside New York City Booms As City Dwellers Flee.”
In May, Manhattan apartment deals crashed 80% compared with a year ago – it appears high-end deals were hit the hardest.
At the same time, contracts to purchase New Jersey homes at more than $2.5 million jumped 69% from a year earlier, according to Otteau’s data. The increase was seen in New Jersey counties not too far away from the Big Apple.
Sotheby’s International Realty Tony Verducci said pre-corona, it took 101 days to sell a $3 million-plus home in Short Hills section of Millburn. Verducci said as people leave New York City – he’s sold two luxury homes in the area within 15 days of their listing.
“You’re taking everything you used to do outside and doing it in the home,” Verducci said. “Everyone wants a home gym because their gyms are closed. They want a nicer kitchen because they’re cooking now. When you’re working from home, you kind of need a Zoom room.”
In Westchester County, contracts to buy million-dollar homes jumped 40% in May from a year earlier, according to data from appraiser Miller Samuel Inc.
We’ve noted in the last several weeks, the exodus from big cities to rural communities is happening across the country:
The trend is your friend – the smart money is getting the hell out of dodge as virus pandemic and social unrest implodes inner cities across America – suggesting urban home prices are slated for a decline.
Why isolate in a tiny million dollar apartment, when one can easily enjoy the luxury of a 10,000 sqft mansion in the suburbs for a similar price range.
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