It’s hard to think of two industries more closely intertwined than interior design and real estate; where one goes, so goes the other. And like everything else, the coronavirus pandemic has upended real estate for the past three months—or at least put it on pause. That’s especially true in places where stringent shelter-in-place orders prevented agents from showing properties in person: In New York, the epicenter of the outbreak in the States, the volume of transactions reached historic lows.
As the country reopens in fits and starts, now’s a good time to check in on what the market looks like. On the newest episode of the Business of Home podcast, host Dennis Scully chats with two experts: Shaun Osher, the founder of luxury real estate marketing agency CORE, and Leonard Steinberg, a veteran agent and the chief evangelist for tech-enabled brokerage Compass. Both of them paint a picture of an industry in a moment of profound change—and opportunity.
This podcast was sponsored by BuildLane. Below, take a listen, and check out a few takeaways from the episode. If you like what you heard, subscribe to the podcast (free of charge!) to get a new episode every week.
As it turns out, the real estate market was already troubled before COVID-19. Its problems were broken up by social strata: For low- and middle-tier housing, there was a crisis of scarcity—not enough homes were being built. At the high end of the market, especially in New York, the opposite was true. That’s the byproduct, says Osher, of the rising costs of land and construction materials. As a result, developers would rather take a chance on building ultraluxe $10 million homes and tapping into the very top of the market. The problem is, all of them made the same bet at the same time, resulting in a glut of luxury housing. The pandemic, says Osher, will only push prices further downward. “There will be those buildings that are ill-conceived and will sit, and those will be sad stories.”
It’s a phenomenon you’re likely already familiar with: Everyone who can escape to a suburb already has. The big question is whether they’ll stay. Both Osher and Steinberg play down the thesis that Americans will abandon cities in large numbers. But, they agree, it’s unquestionable that the suburbs will see a boost from city dwellers who have gotten used to more space—and can now work from home. It will particularly help places like Connecticut, says Steinberg, where recent changes to the property tax code have made homeownership far more expensive, creating a sluggish market. Osher posits that city dwellers headed to the suburbs will be looking for smaller, more efficient homes that don’t require a lot of upkeep. Expect development projects that replicate some of the conveniences of city life, 30 miles out of town.
A chance to reset
The first month of the pandemic was a major shock to the system. But with time, both Osher and Steinberg are feeling more optimistic, looking forward to the years ahead as a time of innovation and change in real estate. “Look at New York as a case study,” says Osher. “The first beautiful luxury apartment buildings, like those by [Sicilian American urban architect] Rosario Candela, were designed for living in the turn of the [20th] century. There were formal dining rooms, a maid’s room, a servant’s entrance. … Then in the ’90s, we saw people wanting to go downtown and live in lofts and have everything in one room. … Now is a time to reinvent and rethink—it’s an opportunity for designers and developers. And hopefully consumers will be the winner in being able to live in the home of the future that resonates with their needs for today. … I expect there will be a tremendous amount of creativity to come out of this.”
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