Just a few blogs ago, we were keeping a watchful eye on booming real estate markets while bracing for curveballs that unprecedented times like these are likely to throw.
While certain migration patterns have slowed and even started reversing, one thing’s for certain: Americans are on the move.
For brokers and agents in countless real estate markets, opportunity abounds. Even New York and the Bay Area, both suffering a significant exodus, have begun to attract buyers previously priced out and others who miss the buzz of big-city living.
Among reverse migration patterns are also new discoveries that may continue to influence consumer behavior for years to come.
When the masks come off for good, what people value most in physical spaces may continue to surprise us. Our goal as a company is to ensure that Weichert affiliates and their agents have everything they need to meet these evolving demands.
“Reverse migration” or simply trading spaces?
Video footage scanning empty city streets at the height of the pandemic was chilling. News stories hyped mass departures from iconic areas like New York’s Upper West Side. Were we witnessing the end of cities? For a moment in time, perhaps, but the story is long from over.
While the Upper West Side lost 32,100 residents in 2020 –– 22,697 moved in. It’s a greater net loss than the previous year, but still says a lot about the resilience of people and their willingness to seize an opportunity. Moreover, the majority of New Yorkers who fled moved only to nearby counties, not out of state.
The pandemic seems to have inspired a new appreciation for cities, suburbs, and rural settings, depending on your point of view.
For some, the lockdown ignited a desire for walkable city streets, easy-access amenities, and the simple comfort of smiling faces (albeit from a safe distance). For others, the fresh air and wide open spaces of rural living suddenly signified freedom –– to move around, work peacefully from home, or just get away from it all. For many, the suburbs offered the best of both worlds and, for a lucky few, vacation homes meant second and third housing options to help mitigate whatever came next.
According to Real Trends, New York City did in fact see the “highest net out-migration of homebuyers” among all U.S. metro areas last summer. Less than a year later, however, apartment purchases climbed 2.1 percent thanks to competitive prices, with 97 percent closing at or below the asking price. Seeking a little more space and privacy than before, buyers did favor townhomes over condos.
For younger homeowners who previously had trouble selling, a sudden interest in smaller towns like York, PA, not only made it possible to sell quickly, but use the profits to settle in a larger city. According to a recent survey, 35 percent of millennials said they planned to move or have moved to big cities.
For those still priced out of major metros, the trend is to move to smaller, nearby cities that still offer plenty of amenities at a lower price point. According to CoreLogic data collected April through December 2020, most migrating homebuyers chose metros adjacent to their current location, areas with a lower cost of living, or both.
Even rural towns are experiencing something of a renaissance thanks, in part, to remote work opportunities.
Tiny rural towns like Winhall, Vermont, are booming. Where once it tried luring remote workers with $10,000 cash incentives, last summer’s influx of 10,000 “covid refugees” saw houses selling in a matter of minutes. At last count, the number of available single-family homes in the area has dropped to its lowest level since 2003.
Economists are also keeping an eye on suburban and rural housing markets that have a good reputation for supporting remote workers. For example, in Truckee-Grass Valley, California, more than 20 percent of residents work from home. This region saw average home prices rise a whopping 47 percent in late February 2021. According to CNBC, other top ten small cities with long-term work-from-home potential include Faribault-Northfield, Minnesota, St. George, Utah, and Boulder, Colorado.
Life as we know it has surely been altered forever, but how it ultimately plays out in terms of the housing market is still unknown. So far, rather than a massive and permanent city exodus, Americans seem to be trading spaces. Whether or not our newfound affinity for something different will last, quality-of-life considerations will surely remain front and center.
Putting commute times on the back burner, at least for now, more and more clients are taking a holistic approach to homebuying.
Being near family, enjoying mild weather year-round, and a host of other quality-of-life factors are now part of the decision-making process. Evolving work-from-home policies will further fuel the desire to get the most out of off-duty hours.
Dropbox, HubSpot, Reddit, Salesforce, Shopify, Slack, and Twitter, are just a few major companies allowing employees to work from home permanently. Others like Microsoft are offering “work schedule flexibility”, which allows employees to choose the hours and days they work, along with start and end times. These hybrid work styles that honor individual preferences spill over into domestic life.
Even before the pandemic, real estate markets like the Outer Banks of North Carolina, the Cape Coral and Sarasota areas of Florida, and Boise, Idaho, were growing fast. Those trends are continuing, along with gains in smaller metros outside of New York in areas such as Hudson and Kingston.
We’re no doubt still in uncharted territory. With ongoing vaccine rollouts, employment gains, low interest rates, and well-priced urban options, it will be interesting to see what summer and fall hold for the housing market.
Today’s real estate agent
As buyer and seller preferences continue shifting fast, Weichert agents have done an amazing job responding to their needs. Backed by leading technology, precision systems, and solid support, affiliates are excelling by:
- Keeping it real. We’re clear with clients that it’s still a seller’s market, which can mean very low inventory in some areas, bidding wars, and setbacks on the road to ownership. Setting realistic expectations helps relationships outlast current conditions.Being prepared. Everything’s moving fast. With buyers making offers after little more than a video tour, extra prep is essential. Ensuring buyers are pre-approved, well-informed, and open to seller requests such as extended occupancy can help give them a leg up.Staying flexible. Changing client priorities put ever-changing demands on agents. The best approach is to stay open-minded, optimistic, and ready for anything. This is when all of that expertise really counts.
Heading into summer, most experts agree that the housing market forecast for 2021 includes a continued interest in suburbs, reverse migration into cities, relatively low interest rates, and slim though slightly higher housing supplies.
Is your brokerage ready for whatever the future brings? Better yet, are you using this extraordinary time in history to hone your strategies, differentiate your brand, and grow your business? If not –– we can help!