- Jesamine D.
Earlier this March, our world began to change. Times Square, a popular tourist attraction with over 400,00 pedestrians on a busy day, now surprisingly desolate and bare. Santa Monica Beach, a place where many flee for warmer weather, now strictly enforced with minimal crowds. With everyone at home and many businesses at close, both east and west-coasters have been moving to less-populated regions.
According to Redfin CEO Glenn Kelman, a recent interest in rural homes has massively increased due to the novel coronavirus. The demand has shifted from dense urban areas to more airy and bright rural locations. This behavior has been seen in Northern California, where tech workers have left San Francisco and Silicon Valley and moved to lesser expensive areas like Seattle and Phoenix.
Even in New York, locals have made the move to neighboring homes in New Jersey. The Otteau Group, a real estate data and appraisal firm, found that more than 29,700 homes were sold in June and July, an increase of 33 percent over the same period in 2019.
Since the pandemic, New York City’s median price has also dropped to $665,000, marking the lowest monthly figure, year to date. According to PropertyShark, Queens has also recorded its lowest median sale price to date, $553,400. In the Bronx, the median has dropped to $700,000, a first in the entire year.
“The demand has to come from somewhere, and we think most of that is coming from New York City,” Mr. Otteau said. “In some ways, this looks to me like the 1960s and 1970s, when there was a large outflow of the population pushing into the suburbs.”
The recent confinement, or “Safer at Home” order, includes limiting social gatherings, only leaving your home for medical or grocery needs and staying at least 6 feet away from other individuals. These new and limiting restrictions may be the reason for the sudden shift in rural homes. After spending so much time to oneself, many are probably realizing how nice it is to be distant from others.
“Rural demand is much stronger right now than urban demand, and that’s a flip from where it’s been for the longest time, where everybody wanted to live in the city,” said Glen Kelman from CNBC’s ‘Closing Bell.’ “We’ll see how it comes back, but there seems to be a profound, psychological change among consumers who are looking for houses.”
With such a low stock available this season, housing prices have yet to plummet. In fact, California’s median home price increased to $706,900, a 6.1 percent increase from July and up 14.5 percent from August 2019. The Fed’s initial decrease to near 0 interest rates earlier in March may be the reason for so many hungry buyers, all shopping for their forever home with a historically low and locked-in rate. Other factors contributing to recent sale stats include lower unemployment claims, delayed sales due to the pandemic, an upcoming election, the desire for an in-house office and far away location and, of course, historically low mortgage rates.
“Low rates and tight housing inventory are contributing factors to the statewide median price setting a new record high three months in a row from June to August. A change in the mix of sales is another variable that keeps pushing median prices higher, as sales growth of higher-priced properties continued to outpace their more affordable counterparts,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young.
California Home Sales and Home Prices in August. Screenshot courtesy of CAR.org.
COVID-19 has impacted our world in many aspects and continues to shape an interesting future ahead. 3D virtual tours now take up a third of Redfin listings. Before, it was less than 1 percent. Anytime you walk into a showing, you’ll be equipped with a mask and pair of gloves. Some individuals have even placed offers on a home they saw through a facebook live video. With such a shift in normal, everyday life, many have found true comfort in their very own home. What was once a high demand for urban life, now shifts to serene, centered and bucolic, rural areas.