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The pandemic has shown that remote working is very viable and millennials are ready to buy. But where? With a severe housing shortage and prices of single-family homes through the roof, is it time to consider new alternatives?
One possibility is the suburb of the future: much smaller homes and years but mixed-use areas instead of separate commercial zones. Shopping centers with restaurants, bars, gyms, and small venues for entertainment.
Life can be affordable and enjoyable!
As has been mentioned, one of the major effects on the national real estate market of the pandemic – and, to some extent, social unrest – is that many city dwellers are looking to move to the suburbs. The New York Times recently reported that one listing in the suburbs near New York had 97 showings and 24 offers!
In fact, New York City leads with the number of homeowners looking elsewhere, followed by Chicago, Washington, DC, St. Louis, and Miami.
Analysts warn that, while city living is particularly attractive right now, panic buying is not a good idea. Moreover, trying to sell your city home during the current conditions will certainly not bring top dollar.
According to Zillow, while home sales have improved since the spring, rentals in urban areas have slowed suggesting that many are choosing to live in the suburbs. Certainly, remote working makes the suburbs more attractive for some as does the fact that city dwellers are unable to enjoy many of the amenities of urban living.
So far, Sacramento and San Francisco, along with Dallas-Forth Worth and the New York metro area are seeing the largest split between urban and suburban rent growth.
According to a new report by Redfin, 27 percent of prospective homebuyers say they are looking to move out of their current metro area. New York, Los Angeles, and San Francisco all saw a net outflow of homeowners in April and May.
Certainly, the pandemic and work-from-home opportunities are primary factors as well as the high cost of living in many coastal cities.
Analysts point out that the trend out of expensive metro areas had already started before the arrival of COVID-19 but current conditions have accelerated the trend.
We’ve heard how young home-buyers prefer “walkable urban” communities where they can easily access shopping, restaurants, parks etc. on foot. Of course, most of such neighborhoods are in cities and many cities are out of the affordable range of millennial buyer.
Not surprisingly, Housing in the Evolving American Suburb by the Urban Land Institute finds that 79 percent of the U.S. population lives in suburban and bedroom communities. Interestingly, 79 percent is exactly the same percentage of the San Francisco-Oakland-Hayward metro area while the San Jose-Sunnyvale-Santa Clara finds 58 percent of residents living in the suburbs.
Millennials cited adequate space, commute time and freeway access, and quality schools as prime characteristics when looking to buy. And, of course, affordability.
Zillow is predicting that as affordability continues to worsen in city centers, 2016 will see more first-time homebuyers moving to the suburbs. Many will look to suburban areas with a city-feel: walkable cores and easy access to cities.
Moreover, rents are expected to continue to rise, particularly in the hot coastal markets which will further hasten the move to the suburbs.
Finally, home values are predicted to rise 3.5% in 2016 which will hamper many potential first-time buyers. It should also be noted that the median age of first-time homebuyers is expected to climb to its highest mark ever.
