Moving to the Suburbs
Urban areas have become coronavirus hotspots in the US. Some people with the ability to do so have fled the cities they previously called home. Data from Johns Hopkins University indicates that more than 160,000 people in New York City alone have had the coronavirus. Many New Yorkers have relocated to avoid the higher risk of contracting the virus that accompanies the metropolis’ higher population density.
Sales of real estate outside of urban centers is up, especially for more expensive properties. Steven Magnuson, a real estate broker based in Greenwich, Connecticut reported that he’s been able to raise the rent on the suburb’s most expensive property from $55,000 to $65,000 per month, and there’s currently a waiting list of 18 renters wanting to see it.
Owen Berkowitz, a real estate agent who works in high-end markets outside of New York and Boston, reports similar trends , saying “I can’t remember the last time we were this busy.” The appeal of homes with ample space has increased in light of current stay-at-home orders.
Slowed Urban Growth Pre-Pandemic
Urban growth appeared to be plateauing even before the coronavirus took hold. Data from the US Census Bureau shows that the significant growth in metropolitan areas seen in the early 2010s has diminished in recent years, revealing a longer-term move away from cities.
The country’s three largest cities—New York, Los Angeles, and Chicago—showed positive population growth 10 years ago, but that trend has since reversed. The dispersal of urban populations is likely due to the pre-coronavirus economic upturn, coupled with trends in the housing market over the last few years. Both of these factors provided adult millennials with the means to seek employment outside of cities in ways they couldn’t during the years right after the Great Recession.
Among 68 counties located around the country with more than 500,000 people, 30 have shown a population loss between 2018 and 2019. Smaller cities and suburbs, on the other hand, have seen population growth.
The Future of Suburban Real Estate
As Americans have increasingly considered relocating to homes outside of urban hubs, real estate companies have been eager to appeal to their desires. They’ve been limited to some extent, though, as demand is currently greater than supply, and social distancing has temporarily cooled the market.
New home listings have dropped more than 27% from this time last year. The number of virtual home tours, however, has skyrocketed to adapt to public health measures. On the real estate site Zillow (ZG), the number of 3D tours in the last week of March was more than four times what it had been during an average February week. Listings with, versus without, virtual home tours fare better, receiving significantly more site visitors and more “saves” by interested buyers.
The fact that people are becoming more comfortable working from home could mean that this trend will continue post-coronavirus, which may benefit the suburban real estate market.
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