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Death Of NYC; Life After Bandwidth; Trends We’re Already Seeing

A woman crosses a busy street in New York City before the COVID pandemic hit, many people are leaving cities in favor of high-end housing communities.

LIFE AFTER BANDWIDTH – HIGH-END HOUSING SURGE

There is a property near my home that was recently listed for $2.1 million; it immediately got multiple offers and will sell for well over asking.

Interestingly, it was purchased for under $700,000 in the late 90s, showing what a great retirement investment real estate can be.

But, the most interesting thing about the listing is that it would have likely sat on the market for months last year at this time.

It would have sat on the market b/c of its large size and location way back in a gated community far from the freeway.

But suddenly there is a huge market for the home – and the reason is “life after bandwidth.”

Wealthy Silicon Valley buyers who used to be limited to Silicon Valley for commute reasons are suddenly swarming to high-end East Bay communities and pushing up prices.

This is b/c they no longer have to go to the office every day, and the COVID-crisis and faster internet speeds have shown everyone how easy it is to work from home.

They are not moving to Jackson Hole, Park City or even Des Moines, but instead moving to high-end communities that are much farther from their company HQ but still within driving distance.

Many have been predicting this trend but we are now seeing it play out in real-time. We are seeing a similar trend in our Austin, TX, market as well.

I have been blogging about the strength of the housing market over and over, but I focused entirely on “median” price points getting elevated by inventory shortages and demand from millennials.

I, however, did not see this surge in demand for high-end housing in these outlying markets.

In fact, I expected many of them to soften, particularly as many Californians continue to flee the state.

NYC IS DEAD FOREVER

And speaking of trends, blogger, entrepreneur and podcaster, James Altucher, recently penned this column, titled NYC Is Dead Forever, causing a lot of commotion in the blogosphere.

He focuses on the three reasons people love NYC: (1) Business Opportunities; (2) Culture; and (3) Food – pointing out how all three have gone by the wayside with so many people permanently exiting the city.

(Interesting aside: the #1 destination of exiting New Yorkers is Atlanta).

He also touches on commercial real estate (deflationary death spiral) and colleges, and “life after bandwidth,” (the biggest driver of these trends along with COVID).

Altucher posted his column on Twitter, and the responses were equally interesting.

Dallas Mavericks owner and Shark Tank star, Mark Cuban, a devout capitalist if there ever was one, brushed off the column by stating that NYC will see a revival as soon as rents and prices drop and new opportunities arise.

Cartoonist and blogger, Scott Adams, another optimist, also seemed less concerned, stating that NYC will in fact never be the same but that entrepreneurs and businesses will find ways to repurpose pretty much everything in NYC that is sitting idle now.

Altucher and Cuban are no doubt both right, but these changes will take years.

Many also pointed out how these trends are limited to cities like New York and San Francisco with large urban cores, while cities like Miami, Atlanta, Austin, Dallas and Phoenix will probably do just fine.

In any case, I highly recommend reading Altucher’s column as I love discussing trends like this.

It is interesting to watch them take hold in real-time, and these trends are something all of us in real estate and mortgages simply need to be cognizant of.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167