Huge Migration out of Cities is the Real Covid-19 Real Estate Story
A whopping 27% of homebuyers are searching out of town, and Sacramento, Phoenix, and Las Vegas top the list of destinations. It seems that many people living in expensive urban markets are seeing little reason to continue living there with so many big companies allowing workers to stay home and work remotely.
According to reports out of Redfin, the coronavirus pandemic is causing a huge migration pattern out of major cities like New York, San Francisco, and other expensive urban markets. Suburban and cheaper markets are already benefiting from the surge in these big moves.
San Francisco is in a unique position compared to other expensive markets; it’s the only metro that has had more listings created after the pandemic without an uptick in demand. Experts proclaim this has begun to pop the real estate bubble in the city.
Many in San Francisco’s expensive markets are reporting canceled sales, withdrawn offers, and buyers walking, along with a wave of price cuts to the current unsold inventory.
New York’s market took a measurable hit after its initial severe outbreak of COVID-19 this year. Its residents began to flee the overcrowded city to avoid the disease and lockdown.
Then New York, especially downtown, was hit hard with social unrest after the George Floyd incident. Reports of out-of-control homeless encampments, disorder, and crime have proven to be the one-two punch to New York’s luxury real estate market; prices have fallen as inventory increases.
According to Redfin, in the second quarter, the top five outflows were from New York, San Francisco, Los Angeles, Washington, D.C., and Chicago. Coastal cities with the most expensive real estate are being hit the hardest.
This is the first big trend in real estate during the pandemic. However, home prices in many markets are rising fast due to a shortage of inventory, especially in Florida. Some South Florida markets like Palm Beach have seen 20% YOY price increases due to a scarcity of properties.
One thing that many experts can agree on is that no one knows where this will all take us when the dust settles, but most agree suburban areas will pick up the urban losses.