Could homebuyers’ mass migration from populous city centers to sprawling suburbs soon end? Some reports and anecdotal evidence say cities are regaining popularity: activity is increasing in higher density, metro areas.
Last summer moving companies were turning away customers in New York City, and the city saw the highest net out-migration of homebuyers among all metro areas. But vaccine rollouts, employment gains and—at least in Manhattan—deals are bringing buyers back.
For example, apartment purchases were up by 2.1% in Q1 2021 compared to the same period last year. According to published data, buyers looking for deals are moving back: Of the 2,457 home sales that closed in Q1, 97% went for at or less than asking price. Not only that, but the March uptick in home sales was the strongest since 2007, according to the Wall Street Journal.
Buyers returning to the metro market and buying in multifamily buildings are shifting their interests from condos to townhomes, according to Compass affiliated agent Pamel D’Arc, who said the desire for space and privacy has created the shift. Her statement is supported by data: 59% of Manhattan closings in 2020 of $5 million or more were for townhomes, whereas townhome sales in 2019 accounted for 11.5% of 2019 luxury sales. Why the increase in popularity? Townhomes are usually larger and more spacious, and often come with an outdoor area or garden space.
Job opportunity, affordability and outdoor amenities are the major driving factors of movers’ choice to relocate, according to CoreLogic data collected April through December 2020, which showed that most migrating home buyers chose metro areas that were either adjacent to their current location, had a lower cost of living or both. U.S. housing prices increased at nearly the same rate in urban (8.8%) and suburban (8.7%) areas last year, according to Zillow data. Affordable cities are regaining popularity for many buyers, including Detroit, Mich. and Toledo and Cleveland, Ohio.
While the uncertainty caused by the COVID-19 pandemic did inspire some homeowners to head for the space offered by the suburbs, some experts argue the reports were overblown and most migration will be temporary. For example, interpretation of Pew Research data showed that although about 5% of Americans reported moving during the pandemic, “about one in seven who reported moving through November said it was because their college campus or school had closed.”
College-age movers are also more likely to be renters, and recent information from Apartment List indicates they’re also moving back to urban areas, supporting the idea that cities are regaining popularity. The report summary concludes that “despite many accounts of an urban exodus, the COVID-19 pandemic will not leave American cities hollow. Throughout the pandemic search activity has turned towards large, dense cities, not away from them. For every renter who left, there appear to be many ready to take their spot.”