The pandemic and stay-at-home guidelines stimulated a lifestyle reevaluation for many people. For some, that meant giving up a city home for the fresher air and outdoor space of the suburbs or the country, but, on the other hand, some took this as an opportunity to fulfill the dreams they had long nurtured to downsize from their too-large home and embrace an urban way of life.
“While there’s no question that, on the whole, more people are reluctant to live in central London right now, we’re seeing a simultaneous trend of empty nesters with bigger country homes that are not well-connected to public transit finally finding buyers,” said Martin Bikhit, a managing director at Berkshire Hathaway HomeServices Kay & Co. in London. “Covid-19 released these people from the inability to sell their more-isolated homes, and now they can move where they want to be: near friends and family in the city and with access to culture and to high-quality medical facilities.”
The equation works well for some empty nesters, particularly those with larger properties, Mr. Bikhit said.
“They are now able to sell for the price they want, so they’re maximizing their profit on the sale and finding a better price in the city,” he said. “Brexit shaved 10-to-15% off values in Central London, and now we’re seeing lower volumes of sales due to COVID-19.”
In New York City, Darrell Williams, an associate broker at MNS Real Estate, recently worked with buyers who sold a large single-family home in New Jersey to buy a US$1.3 million condo in Harlem.
“They were able to pay cash for the condo because of the sale of their home, and they figured that COVID-19 cases would go down,” Mr. Williams said. “They wanted to be near all the conveniences of city living and to Central Park.”
Renewed buyer interest in suburban homes combined with price reductions in the city works well for downsizing empty nesters.
One couple, who Vickey Barron, an associate real estate broker with Compass real estate brokerage in New York City, worked with, recently sold their Westchester County home quickly for more money than they expected, so they accelerated their plan to move into Manhattan to be close to their adult kids, have less maintenance and enjoy city life.
“Some people are taking advantage of this opportunity of urban sellers willing to listen to reasonable offers and low mortgage rates,” Ms. Barron said. “But there are also just people who like the city and know it will come back strong.”
Walkability and city amenities drew one couple from Garrisonville in Prince William County, Virginia, to sell their large suburban home and buy a two-bedroom condo in Washington, D.C., said Laura Henne, a real estate agent with Urban Pace in Washington, D.C.
“This couple downsized by more than half to buy a 1,200-square-foot condo at eNvy in the Capitol Riverfront neighborhood,” Ms. Henne said. “When they wrote the contract for the condo, they were a little nervous about selling their larger home during the pandemic, but it sold quickly and they were able to buy for more than US$1 million.”
Shifting Priorities for Urban Buyers
As it is changing so many things, the pandemic is influencing the features that buyers want most.
“It used to be that the view trumped everything, but now space trumps views,” Ms. Barron said. “People want it all, of course, but if they have to compromise, they’ll go for bigger and better space rather than a smaller place with a great view.”
So, for example, townhouses are more appealing in New York than ever before, Ms. Barron said, because there’s no need to share an elevator.
“People want a larger terrace with 600-to-800 square feet, not one of those little ‘smoking location’ balconies,” Ms. Barron said.
In Washington, D.C., buyers moving from the suburbs are attracted by the floor-to-ceiling windows that wrap around the rooms and offer city, Potomac River or baseball stadium views at eNvy, Ms. Henne said.
“Having at least two bedrooms is also important so that family members can stay with them and there’s space to work at home,” she added. “But the location means more than anything, especially the proximity to places to bike and run along the Potomac.”
Like many buyers, the couple from New Jersey who worked with Mr. Williams wanted at least two bedrooms to be able to use the second bedroom as a home office.
“They also want amenities like a gym in the building because they feel like that will be safer and less crowded,” Mr. Williams said. “Buyers also want a balcony or roof terrace and lots of light and space in the unit.”
While some buyers in London want a smaller two- or three-bedroom “lock-and-leave” apartment for £500,000 to £2 million (US$646,000 to US$2.6 million), Mr. Bikhit said many buyers he’s working with want a big flat overlooking a park.
“We’re hoping to close soon on a £7 million flat in London with buyers who sold a £10 million country estate after four years on the market,” Mr. Bikhit said. “Most people who plan to live in London full-time want at least three or four bedrooms for their kids and grandkids to stay.”
U.K. buyers have the added incentive of a tax holiday for property buyers, Mr. Bikhit explained. From now through March 31, 2021, buyers are exempt from Stamp Duty Land Tax on the first £500,000 of their purchase, a savings of £15,000.
“That’s one more bit of savings that helps people eager to move into the city,” he said.
For some downsizers, the new appeal of their larger suburban home to buyers means they can achieve their goal of two homes: a city apartment and a larger place in a sunny location.
“I’m seeing more buyers snapping up a New York place sight unseen because they see the opportunity when prices are adjusted by 10% to 20%,” said Ellie Johnson, president for New York Properties for Berkshire Hathaway HomeServices. “The most common scenario I see is that people are selling a big asset, buying a home in Florida for the tax benefit and buying a smaller place in New York City.”
In London, some buyers who have a retirement home in Spain or the South of France also purchase a two-bedroom city flat after they sell their country estate in the U.K., Mr. Bikhit said.
Whether they want a big-city home for full-time urban life or an apartment for occasional visits, COVID-19 changed the way people think about home and allowed some buyers to make a move they thought might be impossible.
“The pandemic accelerated people’s plans,” Mr. Bikhit said.
The post Suburban Homeowners Looking to Downsize Buy in the City appeared first on Real Estate News & Insights | realtor.com®.