When COVID-19 closures first began back in March, residents of major cities like New York, San Francisco, Chicago, and Boston started heading out of town—some temporarily, some permanently. Rental buildings in New York City went from fully occupied and commanding top dollar to 50 percent vacancy, practically overnight.
Many city-dwellers found themselves for the first time without the restaurants, nightlife, and other city-specific amenities they had paid a premium for. Some left out of boredom, some left for financial reasons, and many left because they didn’t have the square footage to make working from home (or home-schooling) work. With school and work operating virtually for an indefinite amount of time, city housing markets took a hit and listings sat dormant in many parts of the country for months. But after the summer, things began to change.
Mortgage rates had flat-lined to the lowest numbers we’ve seen since the 2008-era depression. Families who had listed their homes and put in offers on more spacious ones were desperate to sell, and buyer’s markets emerged in major cities that had traditionally been tight on inventory and tough on price negotiation. Savvy buyers looking to make a long-term investment in city real estate saw an opportunity. Those who had money to spend were ready to spend it wisely, and the real estate markets in some big cities began to turn around.
Boston: Record Sales
The Greater Boston Association of Realtors announced the highest single-family and condo sales on record for the month of October. Active listings of condominiums were up 53 percent year over year in October in the metro Boston region alone.
Chicago: 39% Sales Increase
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The Illinois Association of Realtors saw a 39 percent increase in Chicago metro area home sales in October 2020 compared to October 2019.
Manhattan: 34% Sales Increase
In New York City, single-family sales activity jumped 34 percent from September to October alone, according to SERHANT.’s citywide database, suggesting that people have started to return in large numbers. Even though October is traditionally a slow time, sales are still up 6 percent year over year, suggesting a significant uptick in activity when you factor in the pandemic. I’ve been doing more luxury contracts over this past month than I was doing in February before COVID even hit New York City.
One major city that isn’t seeing residents rush back just yet? San Francisco. Traditionally one of the most expensive (regarding home prices, cost of living, and state and local taxes) and least bountiful housing markets in the country, new home listings spiked 46 percent year over year in October, leading to an unheard of 1.6% median price drop compared to the year prior. The unusual availability of single-family homes—coupled with several major local companies relocating out of state and many more (like Facebook) announcing indefinite work-from-home plans—led to both a buyer’s and renter’s market in the city. That’s good news for the local renters who had trouble finding affordable housing before the COVID crisis, as well as good news for first-time buyers and long-term residents looking to move into larger spaces.
As we head into 2021, I expect to see a strong, continued return of people to major cities like New York, Chicago, and Boston, especially with the beginning of a vaccine rollout and some proposed real estate tax credits by the incoming presidential administration. But more than any of these tangible reasons, I expect the big-city market to stay hot for a more gestalt reason: because city-dwellers are city people. City-dwellers aren’t the type who wants to live in rural areas, have only one or two local restaurants to choose from, and lose the electric energy that makes our cities such special places to be. Collectively, we are all looking ahead and looking forward to a return to pre-pandemic life. In New York City and several other major metropolitan areas, we’re in—and will continue to be in—one of the biggest boom markets we’ve seen in the past 20 years.