In early March, when it became clear that you were going to have to either shelter in place or else get where you were going ASAP, those city-dwellers who could afford the privilege of relocating took stock of their options. They would, after all, be paying for two places if they were to rent a vacation home. In the beginning, most stayed put, nervously analyzing the pros and cons. But as the pandemic wore on, short-term rentals in low-density areas within a few hours of city centers started going through the roof.
“People have been desperate to get into less dense areas and quarantine somewhere more peaceful than a city,” Matt Landau, the founder of VRMB, a vacation rental industry organization, says. “For instance, Blue Ridge, Georgia, which is about two hours from Atlanta, saw crazy, completely unprecedented spikes in bookings.” Part of this stems from newly flexible work policies: Two-thirds of employed Americans who now have the ability to work from home said they would be at least somewhat likely to consider moving if they had the flexibility to work from home as often as they’d like, according to a recent Zillow survey conducted by The Harris Poll.
At first, affluent city-dwellers rented for a week, then extended to a month or two, then stayed the whole summer. “Rentals are approximately 20% higher this year than last year, conservatively, and while there are some short-term rentals in the mix, we are mostly seeing long-term rental deals being done,” says Cody Vichinsky, the co-owner of Bespoke Real Estate, which lists Hamptons properties valued at $10 million or more. “I’ve never seen the type of increased energy like we’re doing this quarter.” And as large employers like Twitter and Square announce that their employees can work from home indefinitely, some upper middle class, wealthy, and ultra-wealthy Americans are now looking to relocate for the long haul.
In fact, two and a half months into social distancing, affluent city-dwellers are buying homes in rural areas—and some are even doing so sight unseen.
In New York state, the COVID-19 PAUSE policy means that traditional showings are verboten. “We’re getting offers on virtual showings alone,” says Howie Guja, a real estate agent at Old Purchase Properties in Bellport Village, New York, a rural community about 90 minutes from Manhattan. “Ideally, people come to a house, stand outside, and then the realtor will go through the house using FaceTime so they can get a sense of the interior. Some owners can’t believe that people are willing to buy without actually seeing inside the home. But I’m hearing the same thing from agents in other areas; this is the new norm.” Indeed, Zillow sellers’ use of 3D virtual home tours climbed nearly 600% between February and early April 2020, according to a company representative. And Jessica Lautz, the vice president of demographics and behavioral insights at the National Association of REALTORS®, says that about a quarter of the realtors her association represents report they’ve made a sale in the past week to a buyer who had only seen the home virtually. There is no pre-pandemic data to compare that number to, Lautz says, because “we didn’t really have a good reason to ask the question.” Selling sight unseen was extremely rare.
For Guja, who has built his business using Instagram, the move to image and video-based selling has been relatively intuitive. And because he reaches younger people on that platform, he says many of his current clients are people in their 30s and 40s who have been renting in the city for years and are now looking to make their first home purchase. In his corner of Long Island, the median home price is around $360,000. While that’s still higher than the median home price in the United States, it’s much lower than buying in New York City, where the median home price remains nearly twice that, even as property values have cooled.
In rural pockets of Connecticut, where real estate viewing restrictions are in place but less strict than in New York State, the market is exploding, as potential buyers are coming in droves for socially-distanced, mask-on IRL home tours. “The market is definitely the busiest that any of us have ever seen,” says Else Harney, the founder of Elyse Harney Real Estate, who has been selling homes in Litchfield County, Connecticut for more than 30 years. Mortgage rates are low, she notes, and New Yorkers, taken with the area’s scenic beauty, good public schools, and relative affordability, are routinely making full-price offers, which Harney says she hasn’t seen in a decade or more.
For some, the pandemic has given them a kind of permission to leave a place where the quality of living was lower but jobs were concentrated. “Places like New York City are so dense and people who really didn’t love it but felt pressure to stay are gonna bail,” Guja says. “And they’ll probably never go back.”
But Rachel G. Bratt, a senior research fellow at Harvard University’s Joint Center for Housing Studies and professor emerita at Tufts University, urges caution when analyzing the market. “Until we have a better sense of the trajectory of this disease and where the economy is going, we’re not going to have a real handle on what any of these anecdotes add up to,” Bratt says. She acknowledges, however, that if these trends continue, we may experience a kind of “rural gentrification,” where rural areas experience an influx of wealthier newcomers. That would likely drive housing prices up, creating affordability issues for longtime residents of rural areas. At the same time, a lower occupancy rate in cities could drive urban housing prices down.
Such an exchange may prove cold comfort to the more than 20 million Americanswho have lost their jobs during COVID-19. “In every housing story, there are winners and losers. As ever, this will probably be worst for the most vulnerable people,” Bratt says. “Even if rents decline somewhat in urban areas, people are still not going to be able to afford places to live if they have no income.”
Posted by House Beautiful