The Narrative:
“The New York Times is working on a story about New Yorkers who left the the city for the suburbs (or perhaps for another city) when Covid hit. Now, with businesses reopening and bosses insisting on seeing their employees IN PERSON rather than on Zoom, at least a few days a week, some of those who moved out of the city, are renting or buying apartments not far from the office where they can stay after their obligatory time at the office. And truth to tell, they’ve missed the city so it’s nice to have a place to hang their hat. Then come the weekend, they head back for their primary residence wherever it might be.”
Ick.
I’ve touched on this before, but the media has so desperately wanted a specific COVID Real Estate narrative. They’ve been banging the drum, and it’s pretty annoying. While we’re sort of in the last throes of this story, should we take a seventh inning stretch?
The real story proved a bit more complicated than the narrative they wanted to weave.
Here’s what they’ve wanted to be true:
- First, people were fleeing, never to return.
- Then people were selling at a loss and didn’t seem to care. And New York was dead.
- Then people couldn’t sell and were coming back tail between their legs, unhappily.
- Then those people who did sell had lots of regrets and were leaving Miami to come back to NYC
- And New York is back, Baby!!
What you see above is one flavor combination of Three and Four. There will be many more of these stories. It is true that a few tax Refugees went to Florida…and may come back as FOMO drives them back to Manhattan- events open up, and things seem cool again here, you can bet your beans on it that the Florida Frizzy Hair Phenomenon will grow old, fast.
The issue is that the whole narrative got so simplified. What is missing from it? Let’s discuss.
First, the inordinate amount of renters who are FLOODING back in. The rental market has not been this active in years. Rents are still down 10-15% and landlords are giving incentives, for now. It won’t last. The rental market will return within 12-18 months to full strength.
Second, very few people fled, relative to perception. The young professionals left. That was 90% of it. Yes, some people bought a second home, but didn’t sell in the city. And the normal attrition rate still applies. The churn is REAL right now. We’re seeing not just young professionals flocking back, but more middle-career and C-Suite relocations happening, too. People are taking major jobs in the city.
To that end, we’ll talk about jobs. There is massive inflation in wages. Sought-after law associates are getting major raises to leave one firm and move to another. They are all so busy that they are burning out their associates. This is true within banking, too. This Money Stuff article (which should be required reading for everyone) touches on the labor shortage among investment banks.
What else is missing?
The volume of investors coming back to the city after being kept out by fear of COVID and our former Tangerine Tycoon Tyrant who finally stepped aside at some point this Spring. That market is booming. You’re not hearing much about that right now, either.
All I’m saying is that it was not nearly as bad as people thought. It got pretty quiet for a while, true. But it has so quickly begun to fill in, that we are now looking at the V-shaped recovery that people laughed off. So many predictions already look so foolish.
This narrative that wants to be told doesn’t hold up. Fine, more people bought weekend homes. I get it. But soon enough, you’re going to walk down every street, seeing new restaurants in the landscape, joyful yelling and screaming, packed bars and apartment buildings, and wonder if the past 15 months were all a bad dream.
There are papers to sell, obviously. I just wish that they could have focused on getting the COVID story right, and let the real estate market do its thing.