The suburbs are back: Real estate expert sees ‘great unlocking’ of multiple markets
“This has been a moment of the great unlocking of multiple markets. You see people now being able to move to Manhattan for lower pricing. There definitely has been an adjustment of pricing in several classifications in New York, some more than others. There’s been a demand for single-family homes and there’s cross-pollination between territories.”
So said Leonard Steinberg of the real estate firm Compass to the Business Journal.
“We’re considered a higher-end brokerage, but we do sell a variety of price points,” Steinberg said. “Real estate is hyper-localized and what happens in Scarsdale is completely different from that which happens in San Francisco. What happens in Chicago is completely different from what happens in Chelsea, and even in Manhattan, from neighborhood to neighborhood, it’s different. From price point to price point it’s different. From block to block it can be different. But what we definitely see is recovery of the suburbs.”
The National Association of Realtors (NAR) agrees that real estate it hot. It is reporting sales of existing homes at a record pace, up 24.7% in July despite the economic upheaval created by the Covid-19 pandemic.
The NAR said that while year-over-year sales had been down about 27% in May, by July they had turned around and were up about 6% from 2019; July 2020’s completed transactions of single-family homes, townhomes, condominiums and co-ops jumping 24.7% from what they were in June.
According to the NAR, that translates into a seasonally-adjusted annual rate of 5.86 million transactions.
“The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days,” said Lawrence Yun, NAR’s chief economist. “With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”
Steinberg, who left Douglas Elliman in 2014 to join Compass as its president, now holds the title “Chief Evangelist” and leads “The Leonard Steinberg Steam” at the company. He is credited with being responsible for more than $3 billion in transactions and has a reputation for handling the marketing for some of the city’s top properties such as a $40 million penthouse apartment in Tribeca as well as luxury offerings in Brooklyn, Westchester and Connecticut.
Founded in 2012 as Urban Compass, the firm has developed a platform that allows agents to use proprietary technology to market properties and complete the sale process.
The firm’s founders were entrepreneurs Ori Allon and Robert Reffkin. Allon previously had founded the search technology company Julpan that was acquired by Twitter. He devised the search algorithm Orion, which was acquired by Google.
Reffkin worked at management consulting firm McKinsey & Company and Goldman Sachs. In 2005, he was appointed as a White House Fellow to serve as a special assistant to the Secretary of the Treasury in the George W. Bush administration.
The company had several successful fundraising efforts and, according to an April report by Barron’s, was valued at $6.4 billion. It boasts of having a network of 20,000 agents nationwide, more than 325 offices throughout the U.S. and a 2019 sales volume of $91 billion. It describes itself as the third-largest privately held brokerage in the country.
BEATEN UP BURBS ON THE REBOUND
“Remember that the suburbs have been beaten up terribly in the last few years, and the suburbs actually were undervalued for a long time,” Steinberg said. “The suburbs that were undervalued have a new audience. There’s also a new audience for large homes.”
Steinberg said empty nesters who may want to move back to the city and those in the city who want bigger space are now realizing that the time is right, especially with interest rates down.
Steinberg said that his team has available a wide variety of price points starting at around $700,000.
“They vary in style and size and location, amenities, finish condition. I have some in brand-new buildings that have never been lived in and I have some that require a gut renovation,” he said. “A $40 million property in Manhattan must have outdoor space, must have big views, spectacular finish, top-quality security and amenities and a ‘wow’ factor that justifies that price.”
“The four-bedroom colonial in Scarsdale today might sell within a matter of hours. It all depends on how it’s priced,” he continued. “If it’s a realistic seller who has priced it where the market is you may even have multiple bids.
“When you get above $10 million, everyone says they ‘fly off the shelf’ because those are the headlines the press loves to write about,” he said. “In the last decade, the most expensive properties always take a year to two years to sell, at least. Even in the busiest times the vast majority do take that long at that price.
“It’s not a quick, simple, easy sell because those are not ‘need’ properties,” Steinberg added. “Those are ‘want’ properties. You have time when you’re looking for pleasure. You don’t have time when you’re looking for an essential need.”
Steinberg said that one thing setting Compass apart from its competitors is that it builds all of its technology rather than just purchasing off-the-shelf software and trying to adapt it to its needs.
“Many of the tools are designed to fuel the efficiency of agents so that the consumer doesn’t have to rely on the agent’s brain capacity alone. They rely on the technology mixed with the experience and knowledge that agents have to infuse insights into the procedure,” Steinberg said. “The tools that are built for the agent are one aspect but there also are tools that are built for the consumer, whether they’re a buyer, a seller, a renter, a landlord or a developer.”
Steinberg said that the real estate business is no longer as simple as running an ad and expecting people to come in and write a check.
“Compass combines the best of high technology to infuse technology into the real estate advisory equation,” he declared. “Compass is the ecosystem that provides the technology, infrastructure and help for agents to be the very best they can be so the consumer is best served with a combination of technology and human ingenuity.
“What we try to do at my team is to bring that ingenuity and experience to the table and creating and curating the marketing or purchasing strategy,” he expanded. “No one needs an agent unless they deliver real tangible value.
“Some people are obsessed exclusively with price. I personally believe the quality of service and quality of product are as important or more important,” Steinberg continued.
“We also try to simplify the process. We live in an over-messaged, over-complicated world,” he said. “Simplification for the consumer has real value to them. Time is a lost luxury and you really cannot replicate time. I think we’ve learned that more now than ever before.”