Home shoppers are increasingly searching outside their metro areas.
© Bloomberg Finance LP 2014
In crowded housing markets hit hard by the coronavirus pandemic, city dwellers are looking at where they want to live through a new lens. During the second quarter of 2020, 51% of realtor.com’s views from urban residents of the nation’s 100 largest metros went to suburban properties in their metros, a record high since the real estate listings website began tracking metro level search data in 2017.
“We see lingering effects of the coronavirus on shopping behavior and preferences,” said realtor.com chief economist Danielle Hale. “In the Northeast, especially, people are now as likely as before the pandemic to be looking for a home in a market that’s not where they currently live. However, those looking elsewhere are much more likely to be looking in smaller, nearby markets.”
Urbanites who now find themselves working from home are getting a taste of what life could be like in less densely populated areas, according to realtor.com’s quarterly Cross Market Demand Report, which measures search data to provide insight into where shoppers are looking for their next home.
As many tech companies extend their work-from-home policies and employees anticipate that their employers will afford more flexibility for remote working, the potential exists for home shoppers to search farther from home as the year progresses.
Hale said, “With remote work more common and accepted, it seems that people are looking to locate farther from the office either to enjoy more space at a better price, or get closer to nature in the mountains or at the beach.”
Some home shoppers wary of dense environments are turning their attention to mountain towns for peace and peace of mind. Real estate broker Tye Stockton of LIV Sotheby’s International Realty said activity has picked up from out-of-state buyers seeking single-family homes in mountain resort communities. Buyers are eyeing high-acreage lots and amenities such as home gyms, swimming pools and home offices.
“With so much public land around us, people are seeking out not only Vail, but Aspen, Sun Valley, Jackson Hole, Park City — some of these mountain resort communities — as sort of safe havens,” said Stockton. “Even homes in remote areas that may have otherwise been more quiet in terms of showing or selling activity, we have seen a tremendous uptick.”
Besides more living space, buyers are rethinking what amenities and features they want most in a home. “People are looking for things like updated kitchens,” said Hale. “Perhaps they can set up a workout space in their homes or they are looking for areas that have natural amenities like walking paths and trails where they can go jogging and get their workout in that way.”
During the second quarter, home searches in Seattle, Portland, Los Angeles and San Diego from outside markets cooled, while California metros Riverside-San Bernardino, San Francisco and Sacramento saw an improvement in out-of-market home-buying interest.
Demand in Riverside was heavily driven by Los Angeles residents, while the market also saw demand from San Diego searchers. Sacramento homes were primarily viewed by home shoppers from San Francisco, San Jose and Los Angeles, which could have been prompted by remote workers seeking affordability and more space.
Interest in San Francisco was primarily driven by San Jose, perhaps as nearby shoppers are seeing an opportunity to get into the pricey, exclusive market.
While the Southeast, especially South Florida, and Texas, Mississippi, Alabama, Georgia and South Carolina, saw an increased interest from searchers in other markets during the second quarter, out-of-market searches slowed in July as the region battled a spike in Covid-19 cases. At the same time, some of the region’s largest metros, including Atlanta, Dallas, Houston, Miami and Tampa, saw inbound searches decrease in July compared to the second quarter.
The Midwest saw increasing out-of-market shopping interest before the pandemic hit, but has failed to recapture that strength. Midwestern metro areas have seen the rate at which home shoppers searched outside their home metros almost consistently decrease since February, other than a small improvement in May. Hale said this signals that Midwestern metros are likely still struggling to return to normal, and is consistent with concern for emerging Covid hot-spots in the region and pre-pandemic job market weakness.
“Even before the pandemic, the Midwest didn’t have the same job strength as the South and the West,” said Hale. “Because it didn’t have the job strength, it similarly didn’t have the housing market strength. The housing market is doing fine, it’s just not growing as rapidly as in other parts of the country.”