New York, NY is a hell of a city – and in a post-COVID world, homebuyers might also see it as a bargain.
Since COVID-19 emerged as a major concern in the first few months of 2020, the pandemic has lifted the country’s real estate market in many ways. At first, health problems fueled the digitalization of the home buying process, with some people opting to purchase unseen homes in addition to virtual tours.
Switching to remote work arrangements for people with white collars meant that households across the country could rethink where they lived. This has led to a growing interest in holiday towns, as wealthier Americans have opted to buy second homes to wait for the pandemic.
Meanwhile, the prospect of living in nearby areas for months while waiting for the pandemic, along with low mortgage rates, has led millennial households to leave their homes in big cities for suburbs across the country.
Now, however, as Americans begin receiving the first doses of COVID-19 vaccines, the pandemic seems to be ending. But just as the pandemic has helped fuel rising demand among home buyers, a return to normalcy could fuel property sales in some parts of the country – but not all local housing markets will benefit equally from the end of the COVID era. .
“The strong demographics that fueled the pre-pandemic real estate market will remain in place post-pandemic, which should continue to lead to healthy home sales across the country,” said Ali Wolf, chief economist at the real estate market research firm. Zonda. “The markets they are pursuing in the vaccine economy are those that have been overfed exclusively because of COVID-19.”
Here are the parts of the country that economists say could benefit from the end of the pandemic:
Expensive coastal markets such as San Francisco and New York will become popular again
Some of the most expensive housing markets in the country were already faltering before the pandemic began. In New York, “prices have fallen for the third year in a row,” said Nancy Wu, an economist at Zillow ZG.
StreetEasy subsidiary, told MarketWatch in August.
Even before COVID-19 led buyers and tenants to reconsider their housing arrangements in the name of comfort and accessibility, these markets stagnated because they had simply become too expensive for most people. In addition, the pandemic escaped much of the attraction of life in big cities.
“The pandemic has stopped all the reasons why people live in cities, whether it’s nightlife, cafes, live music or the exchange of information at the office,” Wolf said.
But these markets could see a rapid recovery. Falling prices – especially when combined with low mortgage rates – make holding in the Big Apple or somewhere like San Jose, California, a more feasible proposition.
“Don’t cancel the cities,” Wolf warned. “Places like New York, Los Angeles and Miami are not dead.”
Newer technology centers will be attractive to buyers
In completing the top markets for 2021, Realtor.com identified a number of locations across the country with thriving technology scenes (or markets that were close). Sacramento, California, for example, claimed 1st place because homes in the California capital are cheaper than San Francisco or San Jose. However, being a two-hour drive away, employees in the technology industry could navigate in a viable way to and from those localities.
The Realtor.com ranking is a fusion of markets that are now popular amid the pandemic and those that will be popular in the post-COVID world. Other growing technology centers on Realtor.com’s list include places like Boise, Idaho and Denver, which are more accessible than Silicon Valley.
“Accessibility is attractive at all times,” said Danielle Hale, chief economist at Realtor.com.
“The technology industry will continue to thrive because, although we probably won’t be 100% removed, as many people are at the moment, remote work has been tested in this pandemic time and will continue to be a feature of professional life. with a white collar for the foreseeable future, “she added.” It will position technology cities to go well. “
Smaller southern cities and the Sun Belt could thrive in a remote world
The future of many markets will depend on whether remote work becomes the norm or simply a pandemic event.
Some employers, such as Twitter TWTR,
they suggested that they would allow their staff to work from home indefinitely. If more companies follow suit, this is good news for less populated, warmer cities, Wolf said, citing Tampa, Florida, Phoenix, Raleigh and Jacksonville, Florida as examples.
“Pre-pandemic home hunters have had to juggle their affordable housing needs with employment opportunities,” she said. “The transition to a more flexible work environment allows markets with access to housing, a good lifestyle and a favorable climate to be even bigger for newcomers, even after the pandemic.”
These regions have also attracted the attention of real estate investors – especially those who buy property in states where they do not live.
“Investors outside the state are moving into a daisy chain of markets that are often overlooked and out of the way that stretch across most of the Midwest and the Southeast,” said Daren Blomquist, vice president of market economy Auction real estate site. com.
These investors dominated in places like Memphis, Tennessee and Augusta, Ga. “Real estate investors on the front lines of the real estate market are rushing to rural markets in anticipation of a population shift to these markets,” Blomquist added.
Where the jury is: The Upper Midwest and the Rust Belt
The National Association of Realtors has compiled its own list of the top 10 markets it expects to develop during and after COVID-19. The list included some of the common suspects, such as Boise and Spokane, for example.
But some of the other markets are located in parts of the country that are not often thrown away as hot real estate locations: Des Moines, Iowa, Indianapolis and Madison, Wis.
“We expect to see migration away from western or coastal cities,” Lawrence Yun, chief economist at the National Association of Realtors, said during a forecast summit earlier this month. “People have divergent opinions about markets that would do well.”
Which cities will see an increase in housing will also depend on the diversity of the workforce. The economies of the Midwestern and Rust Belt regions are still heavily dependent on sectors such as production. These industries have not necessarily seen the same revolt that sectors in cities like New York have due to the increase in remote operation, but this does not mean that these places will grow in popularity after COVID.
“Markets that do not have job diversity and lifestyle are the ones that are most likely to suffer in the coming years,” Wolf argued. A good example of this is Orlando: While the pandemic has forced the city’s tourism sector to close for almost all of 2020, the real estate market in Central Florida has remained strong.
That’s because below the surface, there is more diversity in employment in that part of the Sunshine state than many assume. “People hired along the space coast, for example, are still working and fueling solid home sales in Orlando, especially among higher prices,” Wolf said.
This is the same reason why Houston has managed to withstand the peaks and valleys of the oil market – while the oil industry is a major employer there, the city’s workforce is diverse enough to withstand these pressures.
But the cities of Midwestern and Rust Belt have one important thing: they are cheap.
“In today’s environment, low mortgage rates create opportunities, almost no matter what happens to local economies,” Hale said. “But if mortgage rates start to rise, as we expect them to grow as the economy recovers, you may see that this is hurting higher-priced markets more. And since a lot of production is concentrated in areas where real estate is relatively affordable, you might see that these markets are overcrowded. ”