Where buyers go shopping for a home shifted during the onset of the coronavirus pandemic given the rise of remote work as well as affordability concerns. For many Americans, the change could have lasting implications.
As employers firm up future work plans to include flexibility and give many Americans confidence in buying a home farther from the office, a new Realtor.com report shows suburban housing demand is heating up.
The number of suburban home shoppers has surged 42.1% since the onset of the pandemic and took a 24% bigger share of September Realtor.com views than listings in urban areas. While suburban housing is still relatively affordable compared to expensive urban areas, buyer demand is shrinking the home price gap down to just 7% from 10% in 2019.
Danielle Hale, Realtor.com’s chief economist, explained that the suburbs have always attracted buyers looking for more house for their money, but recent data reflects just how much suburban competition has intensified.
“With the rise in long-term remote work options and downtown rents making a rapid comeback, suburban versus urban housing dynamics are shifting,” she said, adding: “From inventory to time on market, recent data shows suburban buyer activity has accelerated at a faster pace than in urban areas.
“Notably, the price premium is shrinking between notoriously expensive urban housing and suburban for-sale homes, typically known for more bargains. Buyers can still get more bang for their buck in the suburbs, but affordability is increasingly a consideration in many markets. As the Covid recovery continues and home prices remain near record-highs, whether the suburban versus urban gap in housing costs keeps closing will be an important factor to watch.”
Hale noted that it’s crucial to remember that the right place to live is going to be different for everyone.
“Even though trends are pushing more and more home shoppers to consider the suburbs for the value, space and peace and quiet that they offer, some shoppers—accounting for 38% of recent home listing views—still prefer to live in urban areas,” she said.
Hale added, “Whether it’s a preference for being close to the office or enjoying the restaurants, nightlife and other culture that is found in urban areas, some will continue to opt for smaller space at home. For those who prefer the urban lifestyle, homes are still pricier on a per-square-foot basis, but the size of the premium is decreasing. In other words, it still costs more per square foot to live in the city, but the gap is shrinking.”