Almost one year into the COVID-19 pandemic, life is starting to feel like it might regain its sense of normalcy. With promising vaccines being slowly rolled around the globe, the focus is shifting away from the immediate, and into what the future looks like- including where people want to live. At the beginning of the pandemic, stories all across the media claimed that cities were dead, people were leaving as a permanent measure of safety and well-being, and that the real estate market would experience a long and slow recovery to the boom it had experienced in the pre-pandemic world. But there’s been a shift, and it’s happening fast- people are returning to cities almost as suddenly as they once left them.
Although it’s true to say that some city residents are now favoring a long-term future in suburbs where they can trade a small high-rise apartment for the sprawling space of a single-family home and a front yard, it’s yet to be determined how long this change will last. There are still too many unknowns about what our daily routines will look like, how cities might change for the better, and how the predicted future of hybrid work will impact our daily lives. There’s still a belief that the social distancing measures will remain prevalent in our society, and in cities where it’s hard to carve out your own small space at an affordable price, many people were convinced that this was the opportune time to leave.
Data collected by the Pew Research Center, a Washington D.C.-based think tank, shows that nearly one in ten young Americans moved during the pandemic for a number of reasons. Some college students moved back home after universities shuttered their campuses, families moving closer together to assist with child care, vacation homes being turned into more permanent residences, and most of all, those who faced job losses moving to cities that had more stable employment opportunities. There are many ways to measure how people move in and out of urban cores, from requests to the USPS to change addresses, data compiled by moving companies, and even the amount of garbage collected by waste removal companies can be indicators of population increases and declines. Perhaps nothing paints the picture better than data from the real estate market that shows what people are buying and renting, and at what scale.
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Reports from brokers all across New York City, in particular, are all aligned on what the future holds for cities. With vaccines slowly rolling out, people are regaining their confidence in the cities they once lived in, and as rents continue to fall from those who left at the first sign of disruption, the once unaffordable neighborhoods more within reach. The median effective rent for a Manhattan apartment declined this past fall to $3,036- an astonishing 11% drop from a year ago. In search of more space but the desire to remain in the city also stayed prevalent, with many New Yorkers moving away from Manhattan and into the outer boroughs of Brooklyn and Queens where housing prices have also declined, leaving an abundant market. Many apartment rentals are beginning to offer one, two, or even three months of free rent and assistance with covering moving fees just to get residents in their doors and units occupied.
Additional data from SERHANT., a full-service real estate brokerage firm, shows that the luxury market is also on the rise. Their SERHANT. Signature report reveals that 106 units were sold in 2020 with a median sales price of $16,050,000. Isolating the ultra-prime condominium market, 2020 was actually the strongest year on record, with the most sales recorded in a single year. “Vaccinations have begun, financial markets remain strong, mortgage rates are near historic lows, and market data from Q4 was better than expected – that trend has continued into the new year,” said Serhant. “Market activity in January of 2021 outperformed January last year, prior to the onset of the pandemic."
Regardless of budget, all of this points to the initial flight out of the city ebbing, and residents eyeing the markets. While the grass might literally be greener in the suburbs, there’s something about living and working in a city that seems to draw people back in. The desire for a new lease on life seems to be less prevalent while the need for a new lease on a place to live returns.
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