Exodus And Return -- October 3, 2020

The other day I posted the following:

Migration: pending home sales hit all-time high. I love it when unmarried millennial journalists, who have no children, own no car, and have never been west of the Hudson River, come up with these explanations: "August pending home sales soar to a record high, fueled by rock-bottom mortgage rates." 

Link here.  

Hellloooooo ... mortgage rates have been at rock-bottom rates for two (?) years. What fueled home sales in August -- mortgage rates were helpful but why now? Why not a year ago? Why not six months ago? Why not six months from now?

Moms.

Moms are moving their families out of places like NYC to where it's save from BLM, defunded police departments, Covid-19 craziness, school teachers on strike, and the list goes on and on and on. 

Remember: Americans, back in March, were under the impression the Covid thing would end before Memorial Day. Now they realize, Dr Faust was talking about Memorial Day, 2022. 

Moms.

Sometime after Memorial Day, Moms realized Covid was not going to go away any time soon, certainly not before the beginning of this next school year. 

Moms are moving their families out of places like NYC into the suburbs, across the river, upstate, out of state, anywhere -- just to flee BLM, Antifa, Covid-19. 

Families were moving in August to get settled in their new school districts. This is not rocket science.

Another link here:  https://www.breitbart.com/economy/2020/09/30/flight-from-the-cities-pending-home-sales-hit-all-time-high/. 

Tonight, I came across this article. I may have seen it before, I may have even linked it, I can't recall but it seems new to me. And it says exactly what I said but maybe a bit differently:

The pandemic-induced summer of escape from New York continues at a moment violent crime is on the rise, restaurant and public venue closures make the city less appealing, public transit is reeling in debt, and remote working set-ups are giving those with means greater mobility.

More worrisome trends... or rather signs of the times signalling that for many the gentrified Big Apple has as one family recently put it reached its "expiration date". Two separate NY Times reports on Sunday detailed that moving companies are so busy they're in an unprecedented situation of having to turn people away, while simultaneously the suburbs are witnessing an explosion in demand "unlike any in recent memory".And then there's fresh data showing that during the pandemic Americans are fast getting the hell out of the more expensive "real estate meccas" of New York and New Jersey.

First, New York City moving are reporting a rush of customers so high it feels like "move out day on a college campus":

According to FlatRate Moving, the number of moves it has done has increased more than 46 percent between March 15 and August 15, compared with the same period last year. The number of those moving outside of New York City is up 50 percent — including a nearly 232 percent increase to Dutchess County and 116 percent increase to Ulster County in the Hudson Valley.

“The first day we could move, we left,” a dentist was cited as saying of the moment movers were declared an "essential service" by Gov. Cuomo late March. Her family moved to Pennsylvania where they had relatives.

And second, the Times details the unprecedented boom in the suburban real estate as an increasingly online workforce is fed up with closures in the city, losing its appeal and vibrancy.

Much more at the linked article. [The graphic appears to add up to well more than 100%. If true, it would suggest there is some overlap (urban suburb and rural suburb, for example, or small town/resort area.]

And I don't think families will be moving back any time soon. However, something else may happen.

Pied-à-terres. Link here. This article was published a year before the pandemic.

When news broke in January that Ken Griffin bought a $238 million penthouse at 220 Central Park South, the transaction didn’t just set a record for the county’s most expensive residential purchase. It also renewed interest in passing a pied-à-terre tax. 

That's because part-time residents like the billionaire hedge fund founder, who owns other record-breaking houses around the world, don't pay state or city income taxes here, which support the services and institutions that make NYC so desirable to second-home buyers in the first place. 

Elected officials are eyeing a yearly pied-à-terre tax aimed at apartments or houses worth $5 million or more that are not the owner’s primary residence. 

Note that it would be an annual tax—as opposed to to a one-time tax, like the New York State mansion tax, which hits buyers as part of their closing costs. 

Some NYC brokers say creating a new way to tax the rich every year will make luxury second-home buyers look elsewhere, while economists and others disagree.

The writer was more focused on the tax angle. I think there's another angle. I know two couples who live outside of NYC. One couple was a military couple I knew very well while in the service. The other couple lives across the street from Sophia, here in Grapevine, TX. One couple is a well-off white couple; the other couple is a very, very well-off upper class African-American couple. They both have magnificent permanent homes, as noted, one in Baltimore, the other here in north Texas. 

Interestingly enough, they both own apartments in NYC and visit the city regularly. Or at least they used to and will again some day. My hunch is that a lot of wives who moved their husbands out of NYC in the past six months, have husbands who are looking to swoop down on some very, very inexpensive property for their pier-á-terre. 

They and their families will have the best of two worlds. When they want to take in the theater or go Christmas shopping, they can stay in their own home in the city.

***************************************
The Pied-Á-Terre Tax?

Moving forward in Albany. Link here. Dated August 18, 2020. 

The bills in the Assembly and the Senate now match, and the state is broke. 

A Forbes contributor has doubts, but he's talking about $100-millionairers and billionaires, not about the type of folks I know.