It’s uncharted territory for the luxury real estate market.
The city was dead, then it was red-hot. Sales in the suburbs were manic, and now numbers are contracting. Vacation homes are the new year-round homes, but also, the Hamptons have returned to a seasonal sales cycle.
It’s a headache for buyers and a nightmare for sellers, many of whom are trying to time the sale of what’s likely the most valuable thing they’ve ever owned.
For guidance, Bloomberg turned to Pamela Liebman, the president and chief executive officer of real estate firm Corcoran Group. Short version? If your house is move-in ready with outdoor space, you’re likely to get a great price.
Obvious question first: What’s the biggest change of the past year or two?
I think in the old days people just hired an agent and put their house on the market. Over time that process has become a lot more curated. It used to be that people would say: “Declutter your house, get rid of pictures, kitchen stuff, little items around the house.” But now people take it to another level. The minimum you’d spend is a couple hundred dollars to have some flowers and a really good cleaning crew, or you can spend thousands on a paint job. But a person just doing a serious resale? They can spend up to $100,000 on staging.
What a daunting prospect, to stage every single room in a house.
We don’t encourage you to stage every room, actually. It’s the public rooms or the primary bedroom. Most people don’t want to spend more than $50,000, and a lot of companies like ours will front the money for the staging, and then take it back when the home is sold.
Is the takeaway that everyone needs to spruce up their house before they sell it?
If it’s an old house on the water in an unbelievable setting, no one cares. Because we know it’s going to be knocked down. When you’re pricing a property like that, you’re really pricing the land rather than the house, so the house is more of a burden. It would almost be better if it wasn’t there.
I guess an important clarification is that we’ve been talking about making a house look nice. But that’s very different from making a house move-in ready.
Right now it’s really hard to renovate a house. People are waiting months and months for materials, and it’s really difficult to get labor. So if you have a house that’s ready to go, we’re seeing a definite premium on that. Particularly because it’s attractive to people moving from different parts of the country. You see a lot of people going to Montana or Aspen or Florida or the Hamptons, and they just want to move in. I have a lot of friends who bought furnished, and they didn’t really care if it wasn’t really their taste. They said, “Look, we’ll change it over time.”
What, over the past year or two, has made the difference between a sale and a buyer walking away?
Having a fantastic setup outside with a beautiful pool landscaping, with an outdoor kitchen, pool house that has laundry facilities, and maybe an area for watching TV really, really helps. Obviously, beautiful entertaining spaces work in warmer climates. But in cooler climates, too, buyers still want cozy outdoor spaces. If you have a gorgeous stone fireplace and outdoor seating area, screens that come down with the touch of a button if it’s buggy out. Three years ago all those things were a “plus,” but as people saw what they needed during Covid, it definitely became more front and center.
That makes sense for the suburbs and the countryside, but presumably that’s not applicable to cities?
Not quite. During the first half of 2021 we saw 222 penthouse contracts signed. That was between January and the end of May, the strongest first half-year of penthouse sales since we’ve been tracking this, starting 14 years ago.
Outdoor space really did become a premium in New York. People want a nice outdoor space with outdoor furniture and a view. Some of these apartments have pools, too—though I think that’s a little over the top.
© Copyright 2021 Bloomberg News. All rights reserved.