COVID-19

Flight from New York City has fueled the North Fork housing market; what will that mean as we reopen?

On a stroll one evening in April, Dave Kapell spotted something a little different in Greenport.

The real estate broker and former village mayor couldn’t help but notice all the waterfront condos lit up at the end of Fifth Street that night, an unusual site before the summer season. To him, this could mean only one thing: the New York City residents seeking refuge from the COVID-19 pandemic had arrived.

“We’re going to experience a population growth,” Mr. Kapell said in an interview earlier this spring. “At least in the short term.”

And what’s now becoming more apparent to people tracking the housing market — from realtors and small business owners to educators and local government officials — is that many of the North Fork’s newest residents seem to be here to stay.

What manifested as an immediate spike in rentals in mid-March — with exploding prices and vanishing inventory — turned into an increase in home sales by mid-April, experts said. That belief is backed up in available reports.

Transfer data published by Suffolk Research Service shows 53 residential closings in the towns of Southold, Riverhead and Shelter Island in the final two weeks in April this year — up 35 percent from the 34 transfers reported a year ago. That’s growth during a state-imposed shutdown that limited how the real estate industry could interact with the public.

Another indicator for the health of the local real estate market is the monthly Community Preservation Fund report published by New York State Assemblyman Fred Thiele, which showed revenues generated by the 2% real estate transfer tax were up 34% in Southold Town in April, 54% on Shelter Island and 56% in Riverhead.

“Clearly real estate activity has continued across the East End,” the assemblyman said in a statement last month.

Sheri Winter Parker of Corcoran said she has observed several reasons for the increase in real estate sales and rentals — all related to a shift in demand from people who call the North Fork home part-time and others who have long desired to own their piece of this paradise. One interesting phenomenon is part-time North Fork residents looking to upgrade, she said.

“People who have had homes out here are coming out and spending more time and they’re realizing that they need more space,” Ms. Parker said. 

She also explained that as rentals were quickly absorbed, residents of New York City and its surrounding areas decided to instead buy on the North Fork and other desirable locations not far from the metropolitan area like the Hamptons, the Hudson Valley and the Catskills. Ms. Parker even spoke with clients who were in contract on places in Manhattan and Brooklyn, but backed out of those deals to instead purchase homes here.

The North Fork certainly adds an element of escape for prospective homebuyers. (Credit: File photo)

Tom McCarthy of Thomas J. McCarthy Real Estate said many of the calls he’s received since the COVID-19 pandemic hit have been from residents of other areas looking to buy into the market while real estate is down. He has to explain to them what is happening on the East End.

“Some of them have said quite surprisingly, ‘Well it’s a pandemic, prices are down so it’s a good time to buy,’” Mr. McCarthy recalled. “I had to kind of reorient their thinking. Where they’re coming from it’s a good place to buy, but on the North Fork, inventory is low and prices are up.”

He said real estate listings are down 25 percent from this time a year ago. And both he and Ms. Parker said they’re even seeing bidding wars on certain properties. 

Mr. McCarthy said one of the ways homes have received multiple bids is in how they were being shown before Phase 2 of the NY Forward plan began to loosen restrictions on real estate last week. During the shutdown, some property owners were opting to have outside viewings of their home, he said, and only letting prospective buyers inside once they had placed a bid on the property. In some instances, that led to multiple offers on houses.

“The prices are going up and some are selling over the asking price,” he said.  

Ms. Parker said she’s also seeing multiple offers on houses.

“Things are going for over-ask — there’s some bidding wars happening — or at least at ask,” she said. “The people who were on the fence [about buying] are making moves.”

Ms. Parker added that a suspected second wave of the coronavirus could lead to a continuation of this phenomenon into the fall and winter, something that has caused the topic of a growing population to be discussed at local school board meetings.

Southold Board of Education president Paulette Ofrias raised the issue of potential increased enrollment at her board’s meeting last Wednesday. While Superintendent David Gamberg said it’s too early to tell, he did anecdotally mention seeing lots of new families in the area.

A woman out for a run down by the water in South Jamesport. (Credit: Grant Parpan)

One local school, where an enrollment spike is already being felt is at the private Peconic Community School in Aquebogue, which services primary school students from across the East End. In an interview last week, co-executive director Elizabeth Casey Searl said a dozen new families have already inquired about enrollment next fall.

“Often times they’re coming from schools that are like ours in New York City,” she said. “Progressive independent schools that are of similar philosophies and approaches to ours.”

She expects the school will seamlessly adapt to the new students because financial hardships suffered since COVID-19 have forced other families to withdraw their children.

Southold Town Supervisor Scott Russell said even if all these shifting demographics lead to more children in public schools that’s actually a good thing in Southold Town, where enrollment has declined in recent years. (In Riverhead, the public school district has actually seen an enrollment spike due to an influx of new, mostly Hispanic, students in recent years. Capacity has been an issue there and that could be exacerbated by full-time residency in some of the more transient parts of town along the waterfront.)

“It’s probably a misnomer to think that more students is equal to higher taxes,” Mr. Russell said of districts in his town. “Most of the infrastructure and teachers are already in place. Every [administrator] will probably tell you they can absorb more students into their districts without a big impact on budgets.”

This population boom can also be viewed as a positive for local small businesses, the supervisor said.

“It brings more of a customer base out as businesses have been able to reopen,” Mr. Russell remarked.

Mr. Kapell, who also serves on the Long Island Regional Economic Development Council, said finding out what products those new consumers are going demand will be part of the key to unlocking the economy.

Ms. Parker added that during the pandemic some businesses saw the effects of that, noting how grocery and liquor store sales were reportedly up. She also remarked at how it has probably helped other small businesses like gyms, which have been offering virtual classes, survive during a shutdown that remains in place for that industry.

Mr. McCarthy noted that a strong real estate market is always a sign that a healthier North Fork economy is on the horizon.

“Real estate and construction is a main economic driver on the North Fork,” he said. “If we can get people into these houses, they’re hiring contractors to improve the houses, they’re buying home goods, they’re stocking their shelves … the benefit that comes from one sale is in the multiple tens of thousands of dollars to the community.

“We see a big benefit by opening up real estate and those dollars should trickle down into the economy.”