Small towns leap into the buzzing housing market
Homeowners selling in an overheated real estate market face a conundrum. Even though they often sell their home for more than they expected, they then struggle to find an affordable place to move.
But these questions have created a boom for small towns. According to data from ATTOM Data Solutions, mortgage origination, or the measure of completed mortgages, in small metropolitan areas surged in the first quarter, as homeowners cash in their homes and trade for more space and better prices. remote working conditions.
The five cities that have seen the highest number of mortgages taken out are Sioux Falls, South Dakota, Honolulu and three locations in the Southeast.
“Rents are making a comeback in many of these metropolitan areas,” said Todd Teta, product manager at ATTOM Data Solutions.
The cities of over one million people that saw the largest increase in first-quarter mortgage lending were nearly all of the Sun Belt cities: Orlando and Miami, Florida, Tucson, Arizona, and Nashville, Tennessee, as well as Baltimore. Overall, ATTOM data showed an increase in first-quarter mortgage originations in 85 of 211 metropolitan areas.
“You could call them level two metropolitan areas,” Teta said. “It’s the next rung up there, where people can get more for their money, where they can work remotely, and they might be swapping a more expensive house in one of the ‘super’. cities “.”
Nick Bailey, president of RE / MAX, noted the recent surge in real estate activity in core cities such as Des Moines, Iowa, and Omaha, Nebraska.
“Usually when we see big trends moving, it goes from the Midwest to the coastline. Now it’s just pockets, ”he said.
The pandemic seller-to-homeowner market is amplifying existing migration trends away from coastal states.
With the new census, California and New York lost seats in the House of Representatives. The Brookings Institution said decennial census data revealed a continuation of the southward migration that had been underway for half a century.
In 1970, the Sun Belt states comprised just under half of the country’s population. Today that figure has risen to 62 percent, an increase of 14 percentage points. This increase was roughly distributed between the southern and western regions, while the share of population in the Midwest and Northeast declined.
Experts say it is no coincidence that the labor market is also spinning through an abnormal level of volatility.
“People’s willingness to sell and move is an indication of better functioning labor markets,” said Jeffrey Strohl, research director at Georgetown University Center on Education and the Workforce. The appreciation in prices encourages homeowners to sell and move to where there are more jobs, he said.
Bailey attributed some of the rotation to professionals who bought homes in remote locations where they could wait for the worst of the pandemic. Many may have expected to be able to continue working remotely indefinitely, he said. But now many CEOs – especially in financial services – are pushing for workers to return to the office.
Now some areas are starting to see a boomerang effect. “Some of the homebuyers who bought a home a year ago when they thought they would now have a few years of remote work are relisting and moving closer to town,” he said . “We’re just starting to see this, which is quite interesting now, as companies are making decisions now about working remotely. “
At the same time, millions of workers are retiring earlier: The National Institute on Retirement Security found that 26% of seniors polled said they were planning to retire sooner because of Covid-19. But when they move, they don’t downsize, putting them in competition with millennials who are raising more families and keeping prices high.
“Baby boomers make up the largest share of salespeople at 43 percent. When they change houses, the difference in square feet is only about 100 square feet, ”Bailey said. “These are not major downsizers.”
Market watchers suggest that the exodus of low-income households to more remote and less desirable suburbs may accelerate. “Seeing these relocations, we know that people who could once afford to live within city limits cannot,” Strohl said.
He added that this could serve as a constraint on job growth, potentially putting the brakes on a broader economic recovery in areas where housing stock is most seriously constrained.
“If the less educated workers are in the service sector and they can’t live close to their jobs, this could add to some of these stories we hear about labor shortages.” , did he declare.