Are homebuyers flocking to suburbia due to COVID-19?



Are homebuyers flocking to suburbia due to COVID-19?

The coronavirus pandemic has left homeowners and apartment renters in cities, suburbs and rural areas with many new challenges. Social distancing protocols and a fear of exposing family and friends to the coronavirus has turned us into a more cautious society. 

That, and the excessive time we’ve spent in our homes hoping this thing would just go away, has caused us to re-evaluate many aspects of life that are important to us: like who we choose to spend time with, what kind of hobbies we indulge in and how to make everyday activities — like pumping gas and buying groceries — safer and less stressful. 

 

Choosing where to live

Where we choose to live is one of those decisions that’s always been based on many factors. Are we just beginning a career? Are we dating? Are we already starting families and settling down? 

One factor is whether or not being near cultural stimuli is necessary. With social distancing limiting the kind of activities you can easily partake in — like concerts, museums, movies, sporting events, dating, dining out — maybe being near those things isn’t as important as they once were. 

Another variable, one that’s only recently come up, is whether our employers require us to come into the office. If so, is public transportation a part of the commute. If not, can we do our jobs effectively from the safety and privacy of our own homes? Is that the kind of workday we want?

And if we are working from home, we also need to consider if the people we live with are also working — or taking online classes — from home. 

 

Migration to the suburbs?

If you’re questioning where you should live or if your home or apartment is big enough to handle life, work, school and play, now’s a good time to look around.

There’s a shift happening in today’s real estate market. The price of homes — and the locations where homebuyers are considering moving to — have been flipped upside down. 

Let’s look at who’s moving to the suburbs:

  1. Some city dwellers, who’ve lost jobs or have been furloughed due to the pandemic-caused economic crisis, may be forced into relocating to less expensive living situations.
  2. Others, who suddenly realized they could work from home, are shunning small studios and one-bedroom apartments in urban highrises and finding roomier, less expensive homes outside the cities.
  3. Many people leaving city life are renters unable to justify paying several thousand dollars a month when that same sum would more than cover a downpayment on a new home elsewhere. 
  4. Couples who’ve gotten closer during the lockdown might have decided to get married, start a family and look for more space.
  5. Conversely, some couples might not have fared too well in such close quarters and are splitting up, both needing their own space.
  6. Young parents in the cities can rationalize moving closer to grandparents in the burbs who can lend a hand with childcare.
  7. Displaced workers may have found success landing jobs outside of the city as suburban-based companies take advantage of the newly available talent. 
  8. Some just want to be closer to family and elderly relatives who could use a hand in coping with lifestyle changes brought about by the pandemic. 

 

Cities are still an option

The suburbs are having their day and let’s give them that. Homebuyers want more rooms inside so everyone can have the space to work or learn or play at home. They’re also looking for outdoor spaces that the city can’t offer. 

But, while many people are opting out of an urban lifestyle, they aren’t venturing too far. Space is one thing, but there’s still the desire to be close to cultural offerings in hopes of a comeback in the not too distant future. In fact, many suburban purchases seem to be second homes, with buyers keeping their city home as well.

Make no mistake; cities aren’t dead by any means. The energy, diversity, community, culture and opportunity that a city offers will return, even if it’s subdued for the time being. And it is still a draw for some homebuyers.

In fact, according to the National Association of Realtors, home prices grew in 96% of metro areas in the second quarter of 2020. A recent CNN article cited that the increase in inventory — and the slightly lower prices caused by panicked sellers — have resulted in recent sales growth despite the pandemic. 

Compared to the previous year, home-purchase contracts in major metropolitan areas signed from July through August are up. In Los Angeles, there was an uptick of 29%. In the Boston and Dallas areas, it’s risen nearly 50%and in the Chicago metro area, home purchase contracts increased by 80%.

And while more space is a major reason to house-hunt in the suburbs or consider relocating to another state altogether, some buyers are upgrading within the cities rather than leaving them entirely. Increased inventory, lower prices, and historically low mortgage rates are causing savvy city dwellers to commit to the cities they love, even though they can work from anywhere. Sometimes all you need is an extra room or two for a home office to make a house a home. And homes with extra rooms are opening up in cities as others leave them behind.

 

Low-interest rates increase buying power

Buyers in both the cities and the suburbs can get more space than they initially thought they could afford and a mortgage rate that seemed unbelievable just 12 months ago.

 Those mortgage rates are still staying low, giving homebuyers everywhere more purchasing power. But the increased demand for suburban homes in what was already an inventory-tight market is causing home prices there to rise, with homes selling for over asking price after being on the market for mere days. 

 

Finally, let’s not blame the pandemic for everything

The 2010s started with a surge in city living, just after the financial crash of 2007, as millennials flocked to urban centers like Chicago, Los Angeles, New York and San Francisco. But even before COVID, that surge started to recede. According to Brookings, major cities had been losing population over the last few years as those same millennials migrated to smaller hubs like Charlotte, Atlanta, Dallas and Denver. New jobs, affordable homes and outdoor spaces provide peace of mind that cramped living in metropolitan cities just don’t.

 

Thinking about relocating?

If you’re looking to move into or out of a city, across town or cross country, it’s smart to speak to a Movement Mortgage loan officer to review your options. By answering a few short questions, you’ll know what you can afford and possibly get pre-approved for a home loan. 

Remember, being pre-approved gives more clout to any offer you make on a house. And sellers take pre-approval offers much more seriously.

Good luck with your move!

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