Higher Demand in
Suburban Real Estate
Home sellers near city limits may see higher
buyer demand.
A new work-from-home trend will increase
new-home sales in areas where land is still affordable.
The COVID-19 pandemic
is likely to heighten a housing trend already taking place across the nation.
Residential
construction activity expanding at a more rapid rate in lower density markets
such as smaller cities and rural areas, according to the National Association
of Home Builders as well as the National Association of Realtors.
Multifamily
development is also “proceeding at a brisk pace in areas where education and
health services dominate” in its latest quarterly report.
We expect the virus
could affect future housing preferences for those currently living in the
hardest-hit, high-density environments like central cities and that housing
demand will continue to increase in medium- and low-density communities.
The first quarter shows
that construction growth expanded over the last year more quickly in
low-population-density areas than high-density regions.
This trend will continue as households seek
out single-family homes further from urban cores, particularly as telecommuting
continues in greater numbers.
While commercial
builders often seek out sites close to downtowns, the cost of land is often
prohibitive near city cores for single-family home builders. An increase in
demand in outlying suburban areas would coincide with an ability to secure land
at reasonable prices.
An unavoidable lesson
of the public health crisis associated with COVID-19 is that major metropolitan
areas faced greater challenges.
High-density
lifestyles, championed by some urban planners over the last decade as a rival
to suburban living, proved to be vulnerable to a virus due to crowded living
conditions, dependency on mass transit, and insufficient health and public
sector infrastructure.
However, the
work-from-home trend isn’t the only reason for the increase in demand for suburban
homes, specially in high-density markets.
Before the pandemic
hit, the rising cost of existing homes pushed some homebuyers farther out from
the city even if it increased the time and cost of commuting.
Single-family construction expanded across all
seven economic geographies, posting the strongest growth (9.1%) in outlying
suburbs of small metro areas, as measured on a one-year moving average.
Over the past year, apartment construction
growth in less dense markets has outpaced expansion in larger metropolitan
areas.
All economic geographies reported net growth
over the past year for single-family and multifamily construction, a reminder
of the momentum home building possessed before the COVID-19 Pandemic.
