‘Viral 9/11’ hits real estate market, a boom predicted
A “slow-motion 9/11” is how Graham Klemm recently described the devastating effects of the COVID-19 pandemic on the Northwest Corner’s housing market.
“History is repeating itself, to a degree,” said Klemm, president of Klemm Real Estate, which serves Litchfield County and Dutchess County in New York.
“I am seeing these echoes of a time gone by,” he said, referring to the aftermath of the Sept. 11, 2011, terrorist attacks and the exodus that followed, as droves of city folk sought safety in the Litchfield Hills.
Fast forward to today, he said, and the raging coronavirus pandemic has a new generation of New Yorkers looking for property in the country, away from the madding crowd, or as Klemm put it, in a place “where there is natural social distancing.”
The only difference Klemm, and other area Realtors see, is that 9/11 was a short-lived catastrophe, whereas with COVID-19 there is no end in sight. Also, unlike the tragic days of 2001, agents could show properties; during the COVID-19 crisis, properties in many states can only be shown “virtually” — although Connecticut brokers are allowed to show homes if the owners are willing to allow people in.
And while that means in the short-term the housing market will suffer a slowdown in sales, in the long term, a boom may be looming.
John Harney, a longtime Realtor in Salisbury, has been selling real estate for three decades in the Tri-state region, most recently with William Pitt/Sotheby’s International Realty. He remembers well the post-9/11 era and the ensuing home-buying rush.
But he had never, until the coronavirus crisis, seen such a dizzying demand for rental properties.
Now that the rentals are all gone, he predicts that many of those renters, who paid “a substantial amount of dollars,” will realize that in the long term that money might be better invested toward the purchase of a home, “to which one could bring their family or friends, and remain safe.”
But in the meantime, said the two Realtors, the uncertainty about when life will return to normal has potential home buyers, sellers and real estate agents on edge.
Even though the administration of Connecticut Gov. Ned Lamont has established real estate transactions and related services in Connecticut — including residential leasing — as an “essential business” that is critical to the state’s economy, restrictions are making it difficult to market real estate in the current environment.
Open houses are problematic, as sellers don’t want strangers to enter their homes. Town halls are closed to title searchers and others seeking the land records that are essential to a real estate transfer. The mortgage and closing processes, too, have restrictions, often resulting in virtual closings.
On the bright side, said Harney, “We have more flexibility in Connecticut than in Massachusetts and New York,” where real estate dealings have come to a halt.
“We essentially have a ‘viral 9/11’ right now,” Klemm said. “We don’t know when it’s going to be safe again, and when people will be going about their normal routines again.”
But he predicted that when the dust settles, a boom will follow.
“New York City is a very transient town,” and a new generation moved into that area of younger people who might not have been aware, until the pandemic struck, of the value of living in a rural, sophisticated setting.
“This may just ignite a fire on the real estate market here — which has always been good, but I expect we’ll see a greater volume of sales six to eight months down the road.
“Yes, it’s very murky now as to when it will all end, but it will end and when it does, people will be looking at houses,” he said. “They may keep that apartment in the city, and buy a larger house in the country where there is room to roam.”
Klemm offered a final word of advice to town leaders in light of the pending crisis: “This is a real lesson to local towns that now is the time to invest in high-speed internet and fiber-optic lines because clearly there is an ongoing need for it. Towns that offer those amenities, he said, “will be valued more than those that don’t. I think this is a real turning point and a lesson” for communities to make the investment.