Extraordinary international events have a way of forever changing our everyday habits, lifestyles, and decision-making.
The terrorist attacks of Sept. 11, 2001, for example, have dramatically altered air travel for nearly two decades, with passengers simply accepting the need for much more “airport time” and earlier arrivals. With the COVID 19 outbreak still forcing us to adjust our habits as the daily rates of infections, hospitalizations, and deaths rise and fall, the long-term effects of this global event remain to be seen.
From the perspective of a longtime Miami real estate agent, Master Broker Hazel Goldman, principal of Goldman Residential Group with RE/MAX Advanced Realty, one glaring trend has become apparent, and this observation represents a major paradigm shift in the way professional people will be working and choosing their homes for some time.
With the outbreak having closed nearly all places of business through the spring of 2020, an extraordinary number of her customers (especially those aged 30 to 60 with children at home) found themselves working from home and accomplishing just as much or more professionally as they did under normal conditions, with exponentially more time for family and exercise. Even with restrictions loosening and businesses slowly opening up in recent weeks, these working couples have never been happier, more fulfilled, or more productive, and dread returning to traditional five-day, eight-to-12 hour workdays — and the long downtown commutes that come with them.
Goldman believes that this dread, and the ability of employees to match or exceed their usual production working from home, will have businesses dramatically reducing their need for the large communal office spaces that have been utilized for decades. This would result in a major departure in traffic patterns, lifestyles, and of course, real estate.
It should be noted that Goldman’s client base is rooted in Miami’s suburban Pinecrest, Palmetto Bay, the Falls and Coral Gables neighborhoods, mainly comprised of single-family homes. As the pandemic raged in March, April and May, many of her colleagues who focus their business on the downtown and Miami Beach condominium markets reported the difficulties of clients unable to enjoy their building’s amenities, concerns about social distancing in cramped elevators, the claustrophobia and isolation that naturally develop in small, compartmentalized living spaces, and the challenges for agents to even gain entry into these buildings for showings. One can only wonder what this experience will mean for their future real estate decisions.
Obviously, this shift that Goldman envisions cannot apply to everyone on every day: Doctors will still need to be in hospitals, litigating attorneys will have to make court appearances, and scientists will need to be in their labs. Haircuts and nails cannot be done virtually, and eventually, it will be safe for students to return to schools.
Goldman still believe many professionals who do not need offices every workday, including accountants, many attorneys, architects, sales and marketing pros, and yes, real estate agents like me, will sharply reduce their office attendance to “physically need to be there” levels. Brunch, lunch and dinner meetings will become the norm for meeting clients, rather than traditional “office” meetings.
Accordingly, many of these professionals who owned or were considering a downtown condo to be closer to work will instead choose larger, suburban homes with more space and large pool/play outdoor areas. Commuting will remain a challenge for them, but one experienced with much less difficulty and frequency.
April 2020 statistics from Miami Realtors seem to bear out these observations. The association reported that single-family home sales decreased 31.6% year-over-year that month (from 1,265 to 865), while existing condo transactions declined 47.9% year-over-year, from 1,364 to 711. The six closings her team completed during the “shelter at home” period also confirm these observations, as none of them experienced any price reductions or time delays. (We are also fortunate to have secured 14 additional pending sales and rentals at the time of this writing, all of which went under contract after April 1.)
The best demonstration of this trend Goldman mentions is the sale of a 4.77-acre, 8,000-plus square foot home in Miami’s Redland neighborhood (about one hour from downtown without heavy traffic), where it normally takes a very long time to sell homes priced at $1.9 million. We had five showings in the first three days it was listed and quickly sold the home at full asking price. The buyers are a professional couple who are moving from a large, luxurious waterfront condominium residence on Brickell, which they now plan to make available for rent.
In the past few weeks, we have also begun working with two additional husband-wife attorney couples without children from Brickell who are eager to relocate to Coral Gables or other suburban areas. The residential “sweet spot” seems to be larger single-family homes (reasonably large lots) priced from $800,000 to $2.5 million.
The obvious downside of this trend, in Goldman’s opinion, will be the challenge of selling two-bedroom condo units, of which there is already a surplus on the market. Goldman also foresees a major challenge for commercial leasing, with fewer people commuting and a decreased need for office space.
Are these simply short-term trends that will be “corrected” once a COVID-19 vaccine is developed and distributed, and things return to normal? Perhaps. Already, we are seeing some encouraging signs of life in the condo market, as restrictions loosen and prospective buyers swarm to perceived bargains. Young people and retirees will always want to be close to the action of downtown and the beaches. But Miami’s huge population of young families and mid-life professionals have been given a delicious taste of the commute-free life, and Goldman expects real estate trends to follow.
Source: Miami Herald