Thanks to COVID-19 millennials do an about face and look to suburbs – not cities – for their next home
Home searches in suburban zip codes spiked by 13 percent in May
When the first wave of millennials were entering the housing market, there was an overwhelming attraction to the notion of city living.
Whether it was the convenience to their work place, access to public transportation, wanting to live in a walkable community, or having the attraction of retail, good restaurants and other forms of entertainment close to their front door, the old-fashioned prototype of residential living sought by their parents and grandparents – the sprawling suburbs – was becoming a thing of the past.
Even those suburban communities started to try to keep up with the Joneses and retrofit their neighborhoods to be more “city-like.”
But now, thanks to COVID-19, millennials might finally be saying that their matriarchs and patriarchs may have had the right idea after all.
Because of the effects of coronavirus, there is an early trend that is showing more of an interest in millennials wanting to buy suburban homes rather than those in the city.
Whether it’s a sudden desire to socially distance with more regularity, or a notion that if a pandemic of this magnitude can happen in 2020, then it can happen again in the not too distant future, bigger, suburban homes – with office space and more room for families – might be a safer bet than the cramped quarters of townhouse or multi-family living in the heart of the city.
“People are reevaluating and saying, ‘I don’t want to live in a dense area, crowded city center, crowded blocks,” said Dr. Jessica Lautz, vice president of demographics and behavioral insights for the National Association of REALTORS® (NAR). “Elevator living is just not the right thing for people today.”
According to NAR’s 2020 generational trends report, there likely won’t be a shift of revolutionary proportions, since 53 percent of 30-39-year-olds already purchase homes in the suburbs, but that conditions like working from home will definitely make the suburb more attractive.
“Among 30-39-year-olds, the primary reason [65 percent] influencing the choice of a neighborhood was job convenience,” said Scholastica “Gay” Cororaton, senior economist and director of housing and commercial research at NAR. “So, with greater opportunity to work from home, living in the city to be closer to work and spend less travel time will be less of a decision factor.”
Affordability is also a major consideration (46 percent) among that millennial cohort, as well as convenience to schools (38 percent) which is also a plus for suburban living.
According to realtor.com, home searches in suburban zip codes spiked by 13 percent in May, more than doubling the interest in urban areas.
Additionally, although homes are spending more time on the market during the pandemic, there is significantly less lag tame in suburban and rural communities than there is in the city because of a greater demand.
“This migration to the suburbs is not a new trend, but it has become more pronounced [during the pandemic],” Javier Vivas, director of economic research at realtor.com told CNBC. “After several months of shelter-in-place orders, the desire to have more space and the potential for more people to work remotely are likely two of the factors contributing to the popularity of the burbs.”
A majority of the country’s 100 largest metropolitan areas are seeing renewed interest in the suburbs. Meanwhile, in big cities like New York, contracts for apartments plummeted by 80 percent in May as compared to the same time in 2019, according to data reported by CNBC.
Homebuilders are the great beneficiaries of this trend, as they are experiencing a far faster recovery from the stay-at-home orders of the spring then they could have ever expected.
With the demand for single family homes rising, new development will be paramount.
“There’s no question that there are people who are fleeing the cities,” Stuart Miller, chairman and former CEO of Miami-based Lennar told CNBC. “There’s no question that the second home has been a place of refuge. There’s no question people are rethinking whether they want to be in high rise rentals with common spaces as amenities vs. having a home of their own with a backyard.”