Posted on Forbes.com on Mar 28, 2021,11:06am EDT by Robert Reiss
As we try to sort out the aftermath of the pandemic and determine the future, I was thinking about a sector that impacts not just our pocketbook, but where we live: residential real estate. So I connected with top residential real estate authority Dottie Herman and asked her about the future of many markets, with a special focus on the nation’s largest real estate market, New York City.
Robert Reiss: What are your predictions for 2025 in some of the major residential real estate markets?
Dottie Herman: No-one can predict the future. Small cities are set to boom in the next five years, while major cities will continue to come off record low prices as a result of the COVID pandemic. Urban markets may see a youth renaissance as they are drawn in by improved affordability through weaker rental rates that began during COVID. Sale and prices may continue to rise for the next several years because the economy is expected to show robust growth.
Dallas, TX: Growth: 25% to 30%
Denver, CO: Growth: 25% to 30%
Miami Beach, FL: Growth: 12% to 15%
New York City: Growth: 10% to 15%
San Francisco: Growth: 10% to 15%
Atlanta, GA: Growth: 5% to 7%
Chicago, IL: Growth: 5% to 7%
Reiss: How did the pandemic impact real estate?
Herman: The pandemic did not change that people need a place to live, what it did change, is that people do not need to be in the office every day, which severely impacted the commercial real estate. Although they are both real estates, residential is doing well, given that people are working from home. Post pandemic, people will continue to work from home, resulting in a decline in commercial real estate. As a result, developers and owners could potentially repurpose space to residential.
Reiss: As you look ahead, what predictions can you make on the long-term impact of COVID on residential real estate?
Herman: A home was always important to people, but people come and go. During the COVID pandemic, the home became even more important to them and this trend will continue. When it comes to life after COVID, people will have a stronger emphasis on health and wellness. Buyers and renters will continue to prefer amenities that contribute to their overall wellbeing. Trends that will continue post pandemic, which including working from home and the office, larger apartments with outdoor space, home offices and multipurpose space will be in demand.
Reiss: How specifically has the pandemic impacted the New York City real estate market?
Herman: New York City is the most expensive housing markets in the country and was the epic center of COVID-19 and virtually shut down in March 2020. In the beginning of the pandemic, the real estate market came to a complete halt. Most people took their homes off the market, being that they could only be shown virtually. At those point, prices dropped, rental vacancies rose, and inventory diminished. Fast forward to September 2020, activity rose, reaching pre-pandemic levels. Inventory opened up creating an opportunity for those that were previously priced out of the market.
Throughout history, New York City has been one of the best long-term real estate investments in the country. People that purchased during the pandemic were able to purchase when both prices and interest rates were at all-time lows. While New York City was the epicenter of the virus, people that believed in the overall recovery of New York City, will be the biggest winners of the pandemic. New York City showed that lower prices presented an opportunity for the real estate savvy and those who were previously priced out. New York City be back to the city it always was.
Reiss: You say New York City will be a stronger market with 10-15% growth by 2025, what do people need to know about the New York City market?
Ten years ago, New York City was rated the second-best city in the world and the first best city in the United States. Five years from now, I believe New York City will be number one in both categories; it will be the number one city in the world! Moving forward New York City will be a younger multigenerational with a healthy diverse mix of people and a multigenerational workforce.
To listen to an interview with Dottie Herman, pre-pandemic go to:
Radio: Dottie Herman, Douglas Elliman CEO shares how building relationships is the key building a real estate leader