By Ralph Bivins (RNR) – Sales of Manhattan homes have fallen by more than 50 percent since the coronavirus outbreak. Many affluent residents are leaving New York City for their second homes or for communities outside the city, driven by concerns over public health, high taxes, potential new levies on the very wealthy, and recurring political unrest.
Some who have departed may not return. Even if a COVID-19 vaccine is developed, the prospect of crowded subways, elevators, and other enclosed urban spaces is likely to make some New Yorkers reluctant to resume their previous routines.
At the same time, trends toward remote work are becoming entrenched across corporate America. With more employees able to work effectively from home, downtown districts that already feel emptier could take longer to recover. For many, the question becomes: why commute into the city regularly?
New York’s situation is notable, but it’s part of a broader pattern. Many major metropolitan areas are seeing population movement toward suburbs and exurbs as remote work and changing lifestyle preferences take hold.
The widespread, real-time experiment with work-from-home during the pandemic has convinced some companies to allow extended or even permanent remote arrangements. Others are expected to implement hybrid models that permit employees to work remotely one or two days each week. These shifts reduce the burden of long, daily commutes and change how people evaluate where they want to live.
“Corporate workplace trends, such as working from home, have energized the suburban housing markets. Even employees who will work from home only one or two days a week in the future are more open to suburban and exurban living,” says Mark Sikes, principal with Deal Sikes, a Houston-based real estate valuation firm. “As this trend plays out, attitudes about long commutes will change and homebuyers will respond by moving farther out.”
Developers and home builders are increasingly seeking lots and developable land in counties surrounding Houston, Sikes adds. New houses in more distant suburbs are becoming more attractive options as urban housing prices rise and available inventory remains limited.
Signs of strong residential demand are evident in multiple indicators. Houston realtors reported a record month in July, selling 11,000 existing homes. Low mortgage rates—hovering around 3 percent—are encouraging purchases, and local indicators point to substantial home-building and growth in suburban Houston.
At the national level, housing construction is also climbing: housing starts rose 22.6 percent in June, according to the U.S. Census Bureau. Lumber prices doubled since April, reflecting intense demand for building materials. Homebuilder stocks have generally moved higher, and builder confidence reached a 35-year high, as measured by the National Association of Home Builders.
In the Houston market, Metrostudy analyst Lawrence Dean reported a 3 percent increase in housing starts in the second quarter despite the COVID-related slowdowns in April and May. If current conditions persist and no major setbacks occur, Houston could see as many as 31,500 single-family starts for the year—about a 3 percent increase over 2019.
For sellers of land, lumber, or homes in outlying suburbs, 2020 may therefore offer stronger opportunities than many initially feared. The pandemic accelerated preferences for more space, flexible work arrangements, and suburban amenities—trends that could support residential development and sales beyond the immediate crisis.
Ralph Bivins is editor of Realty News Report.
Sept. 3, 2020 Realty News Report Copyright 2020
File: Urban exodus. Suburban migration.