The housing market is as good a lens as any to view a metropolis’s health. I spoke with Curbed real-estate reporter Kim Velsey about what real estate can tell us about the future of New York City, and how much (or how little) the pandemic changed our idea of urban living.
Ben: At the beginning of the pandemic, it looked like New York City would be in major financial trouble for a long time to come. A year and change later, the city has its share of problems — unemployment is about twice the national average — but the short-term economic future doesn’t look dire. City and state budgets weren’t hit as badly as many worried they would be, and the cessation of COVID and huge amounts of federal aid money flowing to NYC have helped enormously, too.
Real estate, which is your beat, has seen some major swings over the last year, in concert with the city’s falling, then rising, fortunes. I’m wondering what you think what’s currently happening in the housing sector says about where New York is right now.
Kim: I think what we’ve seen with the housing sector, which is stabilizing on the rental side and really heating up on the sales side, is that the fears — or hopes, depending on how you felt about the wealthy fleeing New York at the beginning of the pandemic — of the housing market changing drastically for the long term were really overblown. At least right now, it’s looking a lot like what happened after the recession, where you had this temporary period of relief when it came to rents and then everything went right back to the way it was. I guess, for better or worse, it doesn’t feel like New York is going to change in any radical way, but there do seem to be some fleeting opportunities.
Ben: So, basically, once a pandemic is over, the appeal of dense urban living goes right back to being where it was? It at one point seemed intuitive that the rise of remote work that the pandemic rapidly accelerated — for white-collar workers, anyway — would result in people realizing that they could do their job pretty well from anywhere, and without the hassles and high prices of the city. And that this would result in at least a small permanent change in the fabric of New York. Why do you think that didn’t really happen?
Kim: Yes, I think so. It seems like this spring, after the vaccine had become widely available, people really started to stream back to the city from wherever they were living. People who’d spent a year living with their parents or extended families were ready to live among friends, to socialize, to experience something close to their former life. I think it’s becoming more and more clear that the pandemic mainly pushed people out of New York who didn’t really want to be in New York before the pandemic, people who were already kind of eyeing the suburbs. Or Kingston. Or Austin.
As for the promise of remote work, I think we’re increasingly seeing that many workplaces aren’t comfortable with workers being fully remote. Sixty percent of workers are expected to be back in offices by the end of September, at least for part of the week. And while flexible work schedules might be here to stay, that allows more latitude with where people live, but not that much latitude. Even before the pandemic, we’d seen workplaces that had really strong work-from-home policies reverse those policies. IBM comes to mind. Although we probably will see companies continue to scale down the size of their offices. But that’s a trend that was happening long before the pandemic.
Ben: You recently wrote (for the Times) about people who were able to find good deals in Manhattan as it became temporarily cheaper during the pandemic. Is there a chance that superdense locations like that (of which there aren’t many in the U.S.) could remain in a strange place, housing-market-wise, for a while? After all, we’re still very far from full normalcy at the offices that make up so much of Manhattan — and that has all kinds of trickle-down effects for the surrounding businesses that catered to workers, and possibly beyond.
Kim: Yes, I think that in places like Manhattan, there will continue to be a window of affordability (which is still not that affordable, just comparatively), in the residential and retail markets. There’s a glut of inventory that needs to get rented out before landlords can start demanding the kind of prices they’d like to. And at least when it comes to commercial deals, there have been some changes when it comes to length of lease terms, deposits, etc., that might stick. At least for a while.
But one of the things that has been interesting is that, as prices dropped, a lot of people saw it as an opportunity to move, open a business, expand. It didn’t feel like there was a lack of interest in New York.
The one thing I’m curious about is tourism and business travel. Both of those have had such a big impact on the NYC economy. It’s easy to see tourism coming back in time, but I do wonder about business travel. It’s such a huge expense, and it stopped completely during the pandemic. It does seem like after a year and a half of doing everything over Zoom, companies might be hesitant to shell out for flights and hotel rooms and generous per diems in the way that they used to.
Ben: Lastly, we’re in the closing days of a mayoral race for which housing is one of the central issues. Is there a sense in the real-estate world that the identity of the next mayor will have a major effect on any of the trends we’ve discussed? And I do know this has mostly been focused on the macro, overall economic health of the city, not so much, say, affordable housing, an essential issue in its own right.
Kim: The real-estate industry often implies that certain mayoral policies could be disastrous for the industry, but honestly, it doesn’t seem like who the mayor is has much effect on the housing market. So much of housing policy is set and dictated by Albany. And so much of what happens in New York, when it comes to supply and affordability, has to do with global trends, like billionaires parking money in luxury condos. I have a hard time imagining things changing drastically under any of the candidates. There’s so much that’s out of their control. In the last decade, the rent-reform laws were probably the biggest, most important change when it came to NYC housing policy, and that happened in Albany.
Rezonings are maybe one of the powerful tools a mayor has, but they’re almost always applied at a neighborhood level, they’re time-consuming, contentious, and they’re not broad enough to really change the big picture.