Residential Real Estate Post-Pandemic
What’s in store?
Hasty solutions, creative and expanded use of technology, and working from home have all affected the ways that buyers, sellers, and agents have gone about their business in the past two years. But will any of the old ways snap back once COVID becomes something we think about once the pandemic eases? Matthew Mackay, co-founder of The Mackay Dixon Team at Douglas Elliman in New York City, doesn’t think so. I asked him about the impact the epidemic has made on the industry.
Technology has changed buyers’ expectations and their decision-making process.
“The photo tours, the video walkthroughs, the drone videos … I think all that is definitely here to stay,” Mackay said. “Most of the tech that we have in place now — and there was an upsurge during COVID where people thought about everything that was possible — will remain.”
That upsurge has changed buyers’ expectations, probably permanently setting a new bar for prospective sellers. “Before COVID,” he said, “buyers would filter through listings using whatever was online for them, but now I think buying decisions are being made based on that material. For many buyers now, the first showing is online. They’re going to expect that better online collateral going forward.”
Staging is playing a bigger role, especially for vacant apartments.
And the expectation for better digital collateral is driving more sellers to stage their properties, which has not been the norm in New York. “Sellers are more open to it,” said Mackay. “But in New York, a lot of people take great care in the design and upkeep of their home. Quite often, we walk into beautiful homes right off the bat, and we don’t need to do much to get them on the market. But people with vacant homes to sell are much more willing to stage then they were in the past. They know that giving a virtual tour in an empty apartment isn’t a very impressive thing and doesn’t really show the apartment in its best light. Sometimes if people need to leave the city quickly, we’ll suggest they take their stuff with them, then we’ll paint and stage and get ready for sale. I just did that for a beautiful apartment in Chelsea. The family’s belongings were just stacked to the ceilings. Luckily, they were open to moving a few months earlier than planned, and I brought in a painting crew, a cleaning crew, and then the stagers. It wound up selling for the full asking price. Had we put it on the market with the sellers’ stuff in there, I’m convinced it would have sold for at least 10% less.”
Open houses vs. individual showings — Who knows?
Open houses have not bounced back to pre-COVID levels, and they might not, considering the digital alternatives. “I don’t know what’s going to happen,” said Mackay. “We thought they would come back in the fall, but with the Delta variant, people don’t want to walk through a crowded apartment. They’d rather have an individual showing.”
“I still often see agents doing virtual tours for buyers over Facetime, walking them through the apartment. We do them about 10% of the time when the buyer is remote. A lot of international buyers are still subject to travel restrictions, and can’t hop on a plane and fly to New York to look at real estate. I’m working on a transaction like that now, where buyers in Florida took a virtual tour with the broker and now are negotiating. They don’t want to travel to see it until their offer is accepted. It’s a risk: They could very well fly up and decide that the tour was better than the reality.”
Remote working will drive the market for second homes and smaller office spaces.
The chips have not entirely fallen in the business world regarding remote work, but a mass return to the 40-hour office work week seems unlikely. So what will it mean when every week is attached to a 3-day weekend from the office? “The office is going to be a hybrid model, because people have gotten used to having the freedom to work from home,” predicted Mackay. “It will be very difficult for companies to get them back into the office five days a week. Many companies will allow working from home two or three days per week.”
This will mean, for people who can afford it, a stronger market for second homes when they can spend long weekends in the country and use a city apartment during the week. “We’ve been seeing this out in the Hamptons, where there’s a huge demand for homes,” he said. “In fact, the market has tightened dramatically with little good inventory to sell.”
COVID is not over. Some people are still conflicted about whether to stay in the city, and some who fled quickly now regret it. The situation is fluid.
Some had one foot out the door already. “The majority of the people who left during COVID and haven’t returned would have left the city anyway,” he said. “For example, young families who were probably planning to leave the city when the kids hit first grade, like a lot of people do. So COVID sped up that process for them.”
But it’s a fluid situation with the love of the city conflicting with the urge to leave, at least for now. Mackay gave an example. “We listed a 3-bedroom apartment in the West Village for sellers who had been living in New Jersey, throughout the pandemic — both working from home, and both likely to be able to continue to work from home. They had a baby during that time, so contacted us to list their apartment, figuring that they would never use it again. We met with them, they gave us keys, they wanted to move forward … until the next day, when they called to say they had spent 24 hours walking around the city and changed their minds! They were falling back in love with the city.”
And people who bolted may be stuck for a while. “I think a lot of people left and then became bored,” he said. “They bought suburban real estate in a rush and in some cases overpaid, and then decided it was too quiet for them. But they spent too much money when they bought, and can’t sell, so they’re stuck.”
So, buyers, cozy up to that laptop. It will play a bigger and bigger role in your decision-making. And sellers, you’ll need to compete in the online world of short attention spans, where you need to not only grab attention, but sustain it, lest buyers click off to the next listing.
