America is looking to move again, and the COVID-19 pandemic is influencing the U.S. housing market both in terms of where people are searching and what they are searching for, according to realtor.com®‘s quarterly Cross Market Demand Report, which measures search data to provide insight into where shoppers are looking for their next home.
After an initial shift in search habits at the onset of the coronavirus in the U.S., home shoppers looking outside their current metro area for homes have surpassed pre-COVID levels, and more are increasingly setting their sights on the suburbs. During the second quarter of 2020, 51% of views from urban residents of the U.S.’ 100 largest metros went to suburban properties in their metros, an all-time high since realtor.com® began tracking metro level search data in 2017
“We see lingering effects of the coronavirus on shopping behavior and preferences. In the Northeast, especially, people are now as likely as before the pandemic to be looking for a home in a market that’s not where they currently live. However, those looking elsewhere are much more likely to be looking in smaller, nearby markets,” said realtor.com® Chief Economist Danielle Hale. “With remote work more common and accepted, it seems that people are looking to locate further from the office either to enjoy more space at a better price, or get closer to nature in the mountains or at the beach. At this point, they are not venturing too far away.”
The search data analysis reinforces the findings of a recent realtor.com® Harris X consumer survey of 2,000 active home shoppers, which indicated that home purchase decisions are being influenced by consumers’ ability to work remotely, desire for more space and their willingness to commute longer to get what they want in a home.
Northeastern markets heat up as search activity is shifting to smaller, less dense areas
Following a decline in searchers looking outside their local market during the second quarter, Northeastern markets saw an uptick in interest in July. This activity was primarily driven by residents of the region’s larger metros looking in smaller, nearby bedroom communities or vacation home markets such as East Stroudsburg, Penn, Bridgeport–Stamford–Norwalk, Conn. and Atlantic City and Ocean City, N.J.
The same trend was evident in the New York metro area, where demand grew in outer-lying counties, such as Nassau and Suffolk County, N.Y., and Monmouth and Ocean County, N.J., but decreased slightly in Manhattan and the Bronx.
Remote work policies could influence the West
With many tech companies extending their work from home policies and employees anticipating that their employers will afford more flexibility for remote working, the potential exists for home shoppers to search farther from home as the year progresses.
During the second quarter, people looking for homes in Seattle, Portland, Los Angeles and San Diego from outside markets cooled, while Riverside–San Bernardino, San Francisco, and Sacramento saw an improvement in out-of-market home-buying interest. Demand in Riverside was heavily driven by Los Angeles residents, while the market also saw demand from San Diego searchers. Sacramento homes were primarily viewed by home shoppers from San Francisco, San Jose and Los Angeles, which could be prompted by remote workers seeking affordability and more space. San Francisco’s out-of-market demand, however, counters these broader trends. Interest in San Francisco was primarily driven by San Jose, perhaps as nearby shoppers see an opportunity to get into the pricey, exclusive market.
South and Midwest cool as COVID cases heat up
While the Southeast, especially South Florida and the states of Texas, Mississippi, Alabama, Georgia and South Carolina saw an increased interest from searchers in other markets during the second quarter, out of market searches slowed in July as the region battled a spike in COVID-19 cases. At the same time, some of the region’s largest metros, including Atlanta, Dallas, Houston, Miami and Tampa, saw inbound searches decrease in July compared to the second quarter.
The Midwest saw increasing out of market shopping interest before the pandemic hit, but has failed to recapture that strength since. Midwestern metropolitan areas saw the rate at which home shoppers searched outside their home metros almost consistently decrease since February, other than a small improvement in May. This signals that Midwestern metros are likely still struggling to return to normal, and is consistent with concern for emerging COVID hot-spots in the region and pre-pandemic job market weakness.
For more information, read the full report here.