When state governments ordered residents to stay at home more than a month ago, it triggered a wave of temporary migration.
“We immediately saw a pickup in our rental market, especially a pickup in our high-end market,” with some renting sight unseen, said Tammy Felenstein, executive director of sales for Halstead Real Estate in Stamford, Conn., close to the New York state border.
Some in the Northeast flocked to Florida. Others, wary of germs easily spreading in high-rise building elevators and through dense city life, rented homes in the suburbs. Still others, particularly young single adults, packed bags and moved back in with their parents. And even for those staying in place – whether in their condo, apartment or house – the isolation made the walls feel closer.
As states plan to reopen their economies, what changes COVID-19 will have on the housing market remain to be seen. Demographers and Realtors alike predict this is a tipping point for people who’ve already been dreaming of backyards, private pools and more space. It will accelerate trends that were already happening, they said, and bring a new level of consideration – whether people upgrade their apartments and condos for larger units or move out of dense cities altogether.
“It’s not going to change people’s view about living in the city; it’s just going to speed up people who planned to move to the suburbs,” said Nicholas Haubrich, a broker with @properties in Chicago.
That migration has already been in motion, according to demographers who study how and why people move over time.
Stagnating big-city growth
One of the best recent times for metropolitan areas and large cities was right after the Great Recession, said William H. Frey, a senior fellow at Brookings Institution who researches demographics and populations. Lured by jobs and affordability of apartments versus homes, young adult Millennials were drawn to downtowns with amenities right outside their doorsteps, particularly in the early 2010s.
Yet even before the coronavirus, population growth in the nation’s three largest metropolitan areas – New York, Los Angeles and Chicago – has slowed in recent years, according to a report by Frey earlier this month. Twelve of the 53 largest metro areas registered population declines in 2018-2019, the Census Bureau data shows, while smaller metropolitan areas such as Phoenix; Austin, Texas; Raleigh, N.C., and Tucson, Ariz. saw growth.
And in the last three years, population growth in the urban core of metropolitan cities has slowed, while suburbs and exurbs outside those downtowns have grown, Frey’s report said.
“A long-term recession could very well put the brakes on this dispersion and, as was the case after the Great Recession, lead to renewed metropolitan gains,” Frey said in the report. “On the other hand, large metropolitan areas and cities—especially those at the center of the pandemic—could become less immediately attractive to movers than they were in the early 2010s.”
In New York, for example – the state with the highest number of reported coronavirus cases – it’s been widely reported that some residents headed to Florida, while others left their high-rise buildings and walk-ups for the Hamptons or surrounding suburbs.
Less than 30 miles from Upper Manhattan, Fairfield County in Connecticut – which includes Greenwich and Stamford – is one such area. Between March 1 and April 25, single-family home rentals in the county increased 41% from the same time last year, 407 homes up from 289, according to data provided by Halstead. Of those, 118 furnished houses were rented during that period, compared to 41 last year.
And Halstead’s Felenstein expects the migration, not just from Manhattan but also Queens and surrounding boroughs, to continue.
“We’re preparing ourselves to be fully busy this summer,” she said, noting low interest rates may entice buyers. “Before the trend was ‘less is more.’ Now it’s not less is more, it’s more is essential.”
With rumblings that the coronavirus could rear again in the fall and winter, “there’s a real fear that this is going to happen again, and it’s given people pause to think if they want to be in a dense area,” said Felenstein, who also serves as the first vice president for the Connecticut Realtors association.
Search for space
“These great cities like New York have historic inertia,” said Joel Kotkin, presidential fellow at Chapman University who studies demographics and cities. “But you are already seeing dispersion” of industries, such as the financial services and automotive industries moving out of tax-laden urban centers and into smaller cities. Toyota, for example, completed the move of its North American headquarters from Southern California to Plano, Texas in 2017.
South Florida has already seen an influx of new residents from the Northeast in recent years, as companies such as Starwood Capital Group relocated their headquarters south.
In Miami, Compass Vice President Carole Smith recounted an email she’d just read, inquiring if the owners of a home she listed for sale would be open to lease. The prospective tenants from New York had been looking for a rental for some time.
Smith said three groups of people are looking for homes right now amid the coronavirus pandemic: those who need to move for a myriad of reasons (such as divorce or selling their existing home), those looking for a deal and then those out of state, “especially if they’re confined to an apartment.”
“They want a house. They don’t want to deal with elevators, their boxes in the lobby,” she said. “They’re looking to lease or lease with an option” to buy.
She signed two leases for single-family homes in April 2019 and leased five this month, starting at $5,500 a month in rent. All of them were 12-month leases. She said she had showings last weekend with two out-of-town prospects on a $15,000-per-month rental in the tree-lined, sprawling-lots Miami neighborhood of Pinecrest.
North of Miami, in a suburb of Fort Lauderdale, former Miami Dolphins player and current Denver Broncos offensive tackle Ja’Wuan James listed his four-bedroom, 2,740-square-foot house two weeks ago. Listing agent Kimberly Knausz said she received interest from a potential buyer living in a condo, looking for more space.
Knausz and other Realtors emphasized that there will be demand for condos and apartments, but said the impact of coronavirus stay-at-home orders will accelerate some to change where and how they live.
“I don’t think there will be a flood of people because there are so many benefits to high-rise living, but for people exploring the possibility, this has pushed them over the edge,” said Knausz, director of VIP sales for the sports and entertainment division of ONE Sotheby’s International Realty.
City life after quarantine
In the San Francisco Bay Area, the emphasis had been on living close to the office but now that working from home is commonplace, people are considering moving further east to the suburbs, said Nick Solis, broker-owner of One80 Realty.
Solis has had clients looking to move from San Francisco Bay to Austin, Texas; Idaho; and Colorado for a lower cost of living, more property and less density.
“People are reconsidering their living spaces in every shape and form,” he said.
Post-pandemic, urban centers will still remain but they’ll perhaps be less dense, said Kotkin, who studies cities. Plus, “urbanity will be taking place in suburban cities,” he said, noting places like The Woodlands outside of Houston and Valencia outside of Los Angeles as suburbs with the makings of an urban city: a walkable downtown with shops.
“It’s not the end of cities. It’s the evolution of cities,” Kotkin said.
