How will the coronavirus impact the Upstate second home market?

If only we knew that answer with certainty, but my crystal ball is self-isolating at the moment. When we’re free in the world once again, will the feeding frenzy of recent years be even more frantic, or will the bottom drop out leaving only the sound of crickets? I do have a strong sense of optimism about the real estate market in The Catskills and Hudson Valley, however, borne out of anecdotal feedback from our second home buyers including what their current general frame of mind is, as reflected in emails and my little Instagram survey. But I would temper the idea that there will be an overwhelming surge, given the reality check that awaits when the full extent of the blow to the economy becomes evident.

Being between 2-2.5 hours from metro New York means we enjoy the benefit of proximity to an enormous potential market of second home buyers. Prior to the outbreak of the pandemic, I and my agents were licking our chops in anticipation of spring, knowing that the coming high season for real estate sales promised to be even more robust than 2019’s banner year.

This region, particularly Sullivan County, has been on an upward trajectory in terms of its economic renewal, addition of desirable amenities like restaurants and lodging, farm/food markets and well-organized events and celebrations, paired with an overall improvement in the quality of housing inventory. Today’s New York professionals have shown that The Catskills resonates for many of them, as increasing numbers choose to purchase homes here each year.

How will coronavirus and the ensuing economic jolt impact this? I believe there are two major forces: First, the fear factor. My sister and her family high-tailed it up here from Manhattan the second school was suspended, and every day they express relief that they are safe and outside the city. This shared sentiment will surely cause thousands to pursue the purchase of a home within a radius of of New York, and is almost certainly a tick in the box for increased activity when we all emerge from isolation.

But the second factor, which is still difficult to gauge, is what the economy will look like when the dust settles. There will likely be vast numbers of businesses that go to the wall, and it’s too early to really understand how that impacts the city and country. A major economic downturn and huge job losses will absolutely put the kaibosh on some buyers’ plans.

This unscientific survey I posted twice now on Instagram illustrates that over two and a half weeks, some of those buyers “pausing to evaluate” their position on a second home purchase have been making a decision. So far twice the number are saying they are more likely to buy than less.

Since I’m not out in the wider world, my inputs are limited and anecdotal, but nonetheless they do provide some hints. I ran a very simple, unscientific survey on Instagram on March 19, asking: Buyers, are you now more likely to buy, less likely to buy or pausing to evaluate. On April 7 I asked the same thing. In that period about 17% of those on the fence made a choice, with those more likely to buy now double those who are less likely to buy. But interestingly, that number had been about triple in the first go-around. A lot has happened in that time, including a reality check for many.

During these recent weeks my vacation rentals business, Red Cottage Inc., experienced an explosion that’s hard to do justice to here. But I’ll just say the circumstances surrounding the boom and the attendant complications make it less thrilling than it sounds. There have been a few long-term guests (we’ve only been accepting long-term) who are eager to buy once this is over. So another unexpected new market: those who have found that their refuge from crisis is somewhere they’d genuinely like to spend time.

So my take is that when the gate to the holding pen opens, I believe we will net out at least at the same point where we would have been absent the virus. The potential is for upside, not downside, in my opinion, however I don’t expect “irrational exuberance” except perhaps for the most desirable properties. My hunch is that by the end of summer we have a significant inventory shortage and a lot of new neighbors.