As COVID-19 erupted in New York City this March, its residents fled.
Hundreds of thousands of city residents relocated to New Jersey, the Hamptons, Connecticut – and Columbia County. Demand for the county’s limited housing stock shot through the ceiling, leading to intense bidding wars, huge properties snatched up within hours of being listed, and a “pandemic premium” on rentals.
Downstaters were trying to escape the virus itself – it killed at least 18,679 people in NYC by June 1, according to the Centers for Disease Control – but they were also trying to escape a city that had lost most of its attributes.
Trevor Moran, the president of the Truss Group, a Hudson-based boutique real estate agency, said the city had lost its “value proposition.”
“You think of the prices people pay to live in Manhattan, and it’s great when you can go to the museum and you can go to these amazing restaurants – but all those value-added propositions are pared back because of [the pandemic],” he said. “You see the city in a brand-new light. You’re suddenly like – these prices that we’re paying – what am I getting?”
Moran gave an example of the intense competition over home purchases. A small, three-bedroom house in the City of Hudson he listed for $489,000 in July received six different bids, driving the price up until it was sold for $551,000 – about 13 percent over the asking price. A seventh bid was received, Moran said, but it had an “escalation clause,” automatically increasing its offer to $10,000 above the highest bid. This eventually drove the buyer’s bid to nearly $600,000, but the sellers rejected it because they found the escalation clause to be underhanded.
Realtors described similar bidding wars across the county.
Gary DiMauro, who owns an eponymous real estate brokerage that sells estates and large properties in mostly rural areas of the northern Hudson Valley, said a “turn-key” property in Columbia County would normally sell within two to three months of being listed – already a notably short amount of time.
This summer, “We would see something go in between 7 to 10 days,” DiMauro said. “With multiple bids.”
Real estate agents were not permitted to show listings prior to the beginning of June, when regions of New York began their Phase 2 reopenings. Prior to this, agents could do virtual walk-throughs, and several told The Other Hudson Valley they had sold houses this way – without the buyers ever having set foot on the property.
Ever since showings were permitted in June, DiMauro said, “it’s been pretty non-stop.”
“As a result, demand outstripped supply,” he said. “Basic economics took hold, and hence one of the reasons we’re seeing multiple-bid situations, properties selling for over asking, and selling in a remarkably short number of days in the market.”
Rudy Huston, the founder of City of Hudson-based Tri-Hudson Realty, said the pressure on the real estate market was mostly felt in how quickly houses sold – he was aware of properties selling the same day they were listed – but the demand had also led to rapid price increases.
He referred to this as the “pandemic premium,” which added “at least” ten percent to a home’s asking price even before the bidding started. Some homes this summer were listed at 20-25 percent above what they would have been last year, he added.
Lisa Bouchard Hoe, Vice-President of TKG Real Estate, said about 75 percent of people buying homes in Columbia County during the pandemic have been from New York City. However, there has also been a large influx of homebuyers from California, many of whom buy properties without ever seeing them in person.
People are relocating from California “basically because of the creative community (and) the proximity to the city,” Bouchard said. “and they’re fleeing from the fires and COVID.”
Though the homebuyer’s market is under unprecedented pressure, the rental market has been even more dramatically impacted.
Huston of Tri-County Realty said when he listed rentals on Zillow during the summer, he would receive up to 400 emailed inquires within one to two days. There was a “pandemic premium” on rentals, too.
“Rents pretty much jumped 20 percent overnight,” he said. “Supply and demand is so out of whack.”
About 85 percent of tenants who had rented from him since the pandemic began were from Brooklyn, Huston said, “I kid you not.”
Though the pace of rental inquires has slowed as the weather has cooled, the premium has stuck, Huston said, and the sub-$1000 studio in the City of Hudson “is a thing of history.”
The average rent in Hudson for residences of any size in 2000 was $390, according to the census.
The local market has also attracted the interest of Real Estate Investment Trusts [REITs]. REITs are groups of investors who pool their capital to buy large numbers of residential or commercial rentals, allowing them to make money off properties they have no hand in maintaining and will most likely never see.
Huston said he recently sold a property on Hudson’s Warren Street to a REIT, and REITs were also pursuing two of his properties around Seventh Street Park.
Columbia County Real Estate: The Next Two Years
There have been both positives and negatives to the downstate dash to the northern Hudson Valley. A deluge of second homeowners, long-term Airbnb guests and day-trippers during the summer and fall led to a surge in sales tax returns, my investigation for The River Newsroom found, helping local governments with their otherwise pandemic-ravaged budgets.
On the other hand, local residents, who have been displaced in greater and greater numbers over the last decade, are going to face the pandemic premium too. Housing advocates fear mass evictions in the Hudson Valley when the moratorium banning them expires at the end of the year.
But with the CDC giving its approval to a COVID-19 vaccine December 12, will the trend reverse itself? Will apartments in Brooklyn and Manhattan – which realtors said were half-empty and dropping in price – fill back up?
Moran of the Truss Group said the long-term prospects for the Hudson Valley are “a big question for a lot of people.”
He said the market couldn’t expand forever, and there will be a natural desire for prices to pull back, but “there is still the rising tide lifting the boat.”
Gary DiMauro didn’t see a bubble in the market, saying current growth piggybacked on years of expansion in the region. He noted housing prices in the northern Hudson Valley did not fall nearly as hard during the 2008 crash as in most parts of the country because of underlying interest in the market.
Many of the people who moved up during the pandemic would not be moving back, DiMauro said.
“A lot of people have been contemplating [a move to the Hudson Valley] for many, many years,” he said. “They just found that COVID-19 was the trigger.”
The next phase of the region’s expansion might be more development.
Lisa Bouchard Hoe of TKG Realty said Columbia County would see a “big building boom.”
“We’re actually seeing builders talking about new construction, which we haven’t seen since 2007,” she said. “There’s just such high demand now.”
More land had been sold in the last six months than at any point in his career, Huston said, with land sales growing more quickly than property sales.
“There will be a lot more development here, no matter how you cut it, in the next year or two,” he said.