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Philip A. White, Jr. joined Sotheby’s International Realty as its chief operating officer in 2004, and rose to the roles of president and CEO.
The firm achieved $204 billion in global sales in 2021, a new high for the company that now boasts 25,000 sales associates in more than 1,000 offices and 79 countries and territories.
White spoke with Inman about his early predictions during the onset of the COVID-19 pandemic and what’s surprised him in the years since.
What follows is a version of the conversation, edited for brevity and clarity.
Inman: Let’s talk about some of your expectations closer to the onset of the pandemic.
Philip A. White, Jr.: I did have a pretty strong sense that the high-end market would really emerge quicker than the other general real estate market. I did predict that. My prediction kind of exceeded my expectations. There was a little bit of guesswork in there as well. But clearly that is what happened.
The real estate community benefited from that. We certainly did at Sotheby’s International Realty. We had a major presence in so many places that were attracted to the high-end buyer. So we saw this emergence of people. It was driven by the ability to work from home, to work remotely.
What’s something else that surprised you that you’re seeing today?
The cost of new construction is going up significantly. I’ve even heard stories as recent as today where the per-square-foot price quoted on new construction is now double what it was literally two years ago. That’s the supply chain, and that’s the cost of building materials. Doubling.
I am out in the Hamptons. But what I just heard was, the original quote was $1,000 a square foot. In the end, that person was going to go forward with it, I just heard it has now gone to $2,000 a square foot. So you have that dynamic. We’re also starting to see some buyers switching to these high-end markets. There are seasonal rentals that people sought after, during the pandemic. There were quotes of very high weekly, monthly rental rates.
My wife’s family is in Jackson Hole. Folks in the subdivision have been renting their homes for $10,000, $15,000 a month.
What’s happening there is that some of the rentals are so high that it’s actually pushing people to consider buying a house because of the economics of it. It may make more sense. That’s what we’re looking at. That’s a current trend that — I don’t know that it’s a trend, but I think we’re starting to see that. And then the other thing that’s pushing it is what I just talked about, which is the high construction costs.
You’ve talked about how more high-end properties, maybe 30 percent, are being sold off-market. It seems like there’s an incentive to have more eyes on it, no?
It varies with price point. When you get into the $10 million-plus range, some of the sellers are more private. They don’t really want everybody walking through their house at an open house. They want to be a little bit more discreet about it. Sometimes even in that kind of scenario, if you have a good real estate agent, they can create competition for it. So you’re really not gonna lose out.
What surprised you in the COVID recovery of real estate?
I don’t think we expected the New York City market to be as soft as it was in 2020. I don’t think we all expected that. And then maybe what exceeded my expectations was the bounce back of the urban markets. I don’t think we really anticipated that to the extent that it occurred.
Even in New York City, you’re probably at 2019 pricing right now. It’s not back to the height that it was. It still is an opportunity, but Manhattan has so many different segments to the market. You know, some are hotter than others, you know, different price points, condo versus co-op, neighborhoods, you know, the microscopic nature of that market.
Just a quick word on cryptocurrency. How important is this now and where will it go?
It’s certainly in its infancy. Without a doubt in terms of the real estate space it’s slowly becoming a little bit more of an acceptable currency. I don’t really think it’s there yet. Because you have to be willing to accept cryptocurrency for your house. That’s not going to satisfy an existing mortgage if you have one.
We’re an international brand, and crypto can be a pretty good currency in terms of crossing over international boundaries. So that’s a positive feature.
As crypto becomes more of an acceptable currency, sellers are more willing to accept crypto as payment for their property. As the currency becomes more stable, it will become more of an accepted form of payment. I do believe that it will become part of a real estate transaction.