On July 14, “The State of the Real Estate Market,” sponsored by Haute Residence as part of its ongoing luxury real estate webinars, offered a year-to-date assessment of selected luxury enclaves in North America: New York City, Northern New Jersey, Westchester County and Hudson Valley, New York; Clearwater/Tampa, Florida; the Cayman Islands; Houston, Texas; and Aspen, Colorado.
Seth Semilof, publisher of Haute Living magazine, moderated the session, whose other participants included the following Christie’s International Real Estate affiliate and brokerage executives:
- Nancy Almodovar, President and CEO, Nan & Company Properties, Houston, Texas
- Sonja Cullaro, Executive Vice President, Christie’s International Real Estate Northern New Jersey, Westchester, and Hudson Valley
- Alex Jansen, Principal, Christie’s International Real Estate Aspen/Snowmass, Colorado, and Coastal Properties Group, Clearwater, Florida
- Brian Meier, Principal, Meier Estates & Ventures, Christie’s International Real Estate Group, New York, New York
- Sue Nickason, Vice President, Marketing and Sales, Dart Real Estate, Cayman Islands
The State of the Luxury Real Estate Market
Dan Conn began the session by discussing the changes seen in the overall luxury marketplace since the beginning of the pandemic: “This market dropped harder than any market I can recall, and it has rebounded quicker than any other,” he observed, saying that after a brief period of “hitting the pause button,” the market—particularly the luxury real estate market—responded to a changed world with buyers at the luxury end now focused on having another home more than ever: “They’re realizing they should have a second place to go.” He indicated that the upturn in the second-home market is likely a permanent change. Regarding New York specifically, he commented that any perceived “pause” is just that, it’s not a massive secular change: “If you’re into the New York life, you’re into the New York life. You don’t leave it.”
If you’re into the New York life, you’re into the New York life. You don’t leave it
The State of the Market: Cayman Islands
In the Cayman Islands, business continuity has resumed with restaurants and other businesses allowed to reopen. Although airports have yet to reopen, Dart Real Estate has seen increase in international inquiries. These inquiries are coming from the Caymans’ traditional feeder markets—Canada, the United States and the United Kingdom—and from relative newcomers such as Hong Kong, mainland China, India, Russia, and portions of Latin America. These “globally mobile” affluent buyers, according to Nickason, are looking to “future-proof” their living arrangements by seeking out a place of safe refuge like the Caymans, which are recognized for their low density, outstanding infrastructure, and tax advantages.
One of the new behaviors observed is an increase in long-term rental demand, since many prospective residents are realizing that since they can now work remotely, the Caymans’ combination of low-density population, outstanding healthcare, COVID-19 containment, and good schools is an attractive proposition: “We check all those boxes.” There is also an increased interest from clients in gaining permanent residency since the Caymans are a tax-neutral jurisdiction.
The Cayman Islands aren’t just palm trees and pina coladas—we’re educating clients on the substance and the style of this region
Agents have been participating in online meetings and seminars that address many of the issues involving Caribbean countries—e.g., countries with Visa-free jurisdictions and banking guidelines for permanent residency—as well as to dispel some of the myths about the Caribbean. “We’re not just palm trees and pina coladas—we’re educating clients on the substance behind the style of this region,” she said, emphasizing the area’s excellent technology and finance sectors.
The State of the Market: Clearwater, Florida
Clearwater and Tampa, which represent both primary and secondary home markets, saw an initial ramp-up in second-home activity while sales volume overall dropped by one-third. However, by April 2020, demand in Clearwater had increased fivefold. July is slated to be the best month on record based on volume for the Tampa Bay area, Jansen said. In the past, buyers in New York, New Jersey, and Connecticut had favored Florida’s east coast, but Jansen has seen greater interest in Florida’s west coast from those northeast areas, which he attributes to the relative affordability of properties in the region, which boasts metropolitan amenities and cultural attractions.
The State of the Market: Aspen/Snowmass, Colorado
In Aspen, predominantly a second-home market, Jansen said sales lagged initially compared with Clearwater, but then notably increased “with a vengeance.” He reported that the market has seen a “100 percent uptick” of properties under contract compared with the same time in 2019, largely due to the catchup played after two months of “anemic” activity. He pointed out that Aspen buyers typically can afford multiple homes, so those clients who had been sitting on the fence have now been taking action. He added that while most buyers prefer properties in Aspen’s core or west side, he has seen increased activity for farther afield “outside the Roundabout” that had previously been dormant.
These outlier listings, typically larger, more remote homes or ranches on substantial parcels, proved to be the very thing buyers were seeking, as a socially distanced, safe refuge—and they have sold rapidly: “We are seeing lots of very large properties going under contract, many north of $10 million, some north of $20 million in that market.”
Jansen indicated that he believes Aspen will continue to do well and that its selling season—typically over by August—will extend into the October timeframe.
These outlier listings, typically larger, more remote homes or ranches on substantial parcels, proved to be the very thing buyers were seeking, as a socially distanced, safe refuge
The State of the Market: Northern New Jersey, Westchester, and the Hudson Valley
In the traditional commuter areas outside New York City, there has been an influx of buyers and renters from New York City into markets across Northern New Jersey, Westchester, and the Hudson Valley. “First it really started more for short-term rentals and then it quickly morphed into buyer interest,” Cullaro said. “We’ve seen a lot of people looking for both primary and secondary residences, and even when they’re looking for a second home, they keep an eye on the school system, because that second residence may become a primary one in the future.” She indicated that many city buyers don’t consider proximity to Manhattan and easy commutes as much of a priority as they do amenities such as large footprints, home offices, and outdoor spaces including gardens, pools, and tennis courts. “Those are some of the key search terms we’re seeing on our website, now that more people are comfortable working from home.”
We’ve found that they’re motivated, financially qualified, and are speeding up the transaction closing times, since they’re eager to move
Agents have been very busy because many buyers are seeking to relocate before the new school year begins. Some homes that were languishing on the market but that were priced well are now receiving multiple offers, many at 15 percent above asking price. In addition, rentals are increasing, and in one instance a $12 million listing in Bergen County, New Jersey, that had some buyer interest before the pandemic was rented within 24 hours. “We have seen that over and over,” Cullaro said. Finally, she noted that the quality of the buyers is stronger: “We’ve found that they’re motivated, financially qualified, and are speeding up the transaction closing times, since they’re eager to move.”
The State of the Market: Houston, Texas
“We are starting to see many buyers from New York and California—those have been two of our big feeder markets as well as Chicago” reports Almodovar. Also, she is observing that local buyers have new requests—for properties with a home gym, or larger spaces, for example. “It’s quite hot in Houston, so now a swimming pool is a must and clients also want to be in neighborhoods with better walkability.” She added that she is receiving more requests for properties with at least one home office, and in many cases two.
While Houston is not a predominantly “high-rise” city, she has observed that residents in the handful of major high-rise residences in the city are looking for homes with outdoor spaces and good “walkability” characteristics. As in other cities, she noted that Houston buyers who are getting married, divorced, or having children are now looking to make changes that involve larger footprints, more amenities, and outdoor space.
Houston buyers who are getting married, divorced, or having children are now looking to make changes that involve larger footprints, more amenities, and outdoor space
With regard to the outlook for 2020, Almodovar offered that with a strong second quarter, her business is anticipating an overall 40 percent increase over 2019. Her team has ramped up its internal marketing capabilities to offer robust virtual tours and video guides to help buyers and sellers.
The State of the Market: New York, New York
With respect to the Manhattan market, Meier reported that the city had been shut down the longest, and the brokerage experienced about 5 percent of its normal transactions. While some high-net-worth residents are leaving the city, he emphasized that those who are departing are putting their properties on the market for rent rather than for sale. “Our rental market, pre-pandemic, had about 5,000 listings available and it has now reached 20,000 available. So, the people that are leaving I think are testing and are looking to other markets while they rent out for a year.”
The number-one searched-for amenity in Manhattan pre-pandemic was for “doormen,” that item has dropped to number four—behind pets, private washer/dryers, and outdoor spaces
Meier hasn’t seen prices drop dramatically; there is some buyer interest that is less international and more local, with many residents who have been sheltering in place for three months now getting married, divorced, having children, and therefore looking to “upsize” in the city. In a few cases there have been bidding competitions among desirably priced Manhattan listings.
Because Meier’s sales team also covers the Hamptons, he has also witnessed bidding wars and properties selling without even going to market—at higher than asking price. With respect to other new phenomena he’s noticed, Meier said that open houses are still not allowed in Manhattan and likely will not be for the balance of 2020, with restrictions that mandate only three persons maximum for a showing at a time, with some co-ops and buildings having stricter rules. He has also observed that while the number-one searched-for amenity in Manhattan pre-pandemic was for “doormen,” that item has dropped to number four—behind pets, private washer/dryers, and outdoor spaces.
During volatile times, people seek out comfort and stability, and you don’t get a better asset class than real estate
Some transactions that had “paused” at the beginning of the pandemic have resumed. “Even with current restrictions, sales have started picking up greatly,” he said. “Just this week, we put a few properties in contract that were sight unseen by people outside New York who viewed the listing via Matterport virtual tours.” Looking forward, he indicated that lower interest rates and the prospect of jumbo-loan approvals in the next several months will create new buying opportunities.
In closing, Dan Conn observed that “during volatile times, people seek out comfort and stability, and you don’t get a better asset class than real estate, especially luxury real estate. . . . Those who invest wisely in their businesses—doing as many on this panel have done—will be the people who succeed. They are our superstars.”
Banner image: Erickson Ranch, Aspen, Colorado