The housing market appears to be unscathed by the economic downturn caused by the pandemic, and Americans are still highly motivated to become homeowners. In fact, the housing market is leading the economic recovery.
All of this begs the question: How has this market been spared the pandemic’s effects on the economy? The answer could lie in how the pandemic is changing the way people live.
Too Close for COVID
As the positive cases of COVID-19 started soaring in large cities, residents began realizing just how difficult it is to socially distance in a densely populated area. In New York, many of those who had no problem paying astronomically high rent because of urban conveniences wonder if that convenience is a big enough reason to stay in such close proximity to so many people.
Increasingly, people who fled the city temporarily to avoid getting sick are deciding to stay in the suburbs or rural areas. They not only felt safer, but found they had a lot more space, which made quarantine far easier and more comfortable.
Now swapping a short commute for a lower cost of living and more room to breathe seems like a great idea to a lot of urbanites.
In fact, according to a recent Harris poll, a large percentage of urbanites—including Millennials—are considering suburban or rural housing due to the pandemic.
Along these same lines, many renters are fleeing their high-priced apartments because they’re finding it’s much more economical to buy and own a home, even in the midst of job furloughs and layoffs.
The majority of Americans who missed their housing payment in June were renters, and 37% of renters are at least somewhat worried that they will face eviction in the next six months. Once the CARES Act eviction ban, as well as state eviction bans, are lifted, there will be no protection for renters who can’t make their payment.
Adding to that, many apartment complexes are actually raising rent costs to compensate for those who are moving out in favor of a house outside of the city. In May 2020, the median rent in Houston rose 0.51% for a one-bedroom apartment and 1.24% for a two-bedroom apartment.
As rent increases, apartment dwellers become more attracted to the advantages of buying a home, like low or no down payment and the 30-day mortgage grace period after closing.
Working from Home
With a growing number of companies allowing their employees to work from home—some indefinitely—more people are turning their living space into office space, something that’s not always easy or possible in a small apartment.
Also, the only reason why many people live in a high-priced apartment in the city is to be closer to work. When your commute shifts to being from your bedroom to your living room, you find there’s really no need to stay in the city.
If you’re a home builder or real estate agent, now is the time to reach out to those who are looking to improve their housing situation. We can help you build a marketing strategy to keep your business top of mind for homebuyers. Let’s talk.
Sources: https://www.marketwatch.com/story/here-are-5-reasons-why-the-pandemic-hasnt-crashed-the-us-housing-market-2020-07-22 https://houston.culturemap.com/news/real-estate/06-17-20-houston-rent-prices-covid-19-impact-abodo/ https://www.usatoday.com/story/money/2020/05/01/coronavirus-americans-flee-cities-suburbs/3045025001/ https://www.marketwatch.com/story/new-home-sales-surge-in-june-and-are-now-above-previous-cycle-high-hit-at-start-of-2020-2020-07-24 https://www.nolo.com/legal-encyclopedia/emergency-bans-on-evictions-and-other-tenant-protections-related-to-coronavirus.html https://www.cnbc.com/2020/06/16/30percent-of-americans-missed-their-housing-payments-in-june.html https://globalworkplaceanalytics.com/work-at-home-after-covid-19-our-forecast https://www.forbes.com/sites/jackkelly/2020/05/24/the-work-from-home-revolution-is-quickly-gaining-momentum/#3f1892271848