The Big Migration: Home Buyers Looking in Rural Areas
One definitive trend happening in US housing markets recently is a migration of people from congested urban areas to the burbs and rural regions.
Home buyers could be looking to buy houses in quieter remote towns away from expensive big cities. The best cities to buy real estate may well be smaller ones where home prices are decidedly more affordable. This exodus sets off a chain of events which would deflate city home prices and raise rural home prices.
Redfin found that as of March 23rd, 2 months ago, the seven-day average of online views of home listings in rural areas increased by 115% year over year, and by 88% year over year for homes in small towns. Page views for properties in cities with populations of more than 1 million were down 10% in the same period. — Mansion Global report.
Could we call this trend the rural renaissance? This trend is becoming a bigger story each week, so let’s look at the factors that are driving it.
Top 7 Factors Driving the Trend to Rural Homes:
- work at home freedom
- Covid 19 threat
- subway, buses, train commutes tiresome and dangerous
- rising unemployed people causing social unrest and riots
- need to sell house in city because can’t afford higher costs coming (property taxes)
- desire for quieter life with clean air and less crime
- easier and healthier to raise a young family
Cities are being equated to rising theme of personal and economic threat that residents feel might worsen.
The Migration Trend to Rural America
It’s not hard to understand. With Covid 19 infection rates and danger highest in the most congested urban areas such as New York, New Jersey, Washington, Atlanta, Los Angeles, Chicago, Miami etc. The threat of a second wave makes the disease threat worse.
Add on violent riots in urban areas too in numerous big cities across the US, and threat of a missing police protection and many residents of dense cities are very nervous.
Recently, companies have relaxed rules about working from home. Without transit, or with transit systems which could literally kill their workforce, corporations including Facebook, Shopify, and others are agreeing to a work at home arrangement.
Cost Savings Could be the Key Factor
The cost savings around work at home are significant. Companies can reduce their office location rental space to perhaps 33% of previous size. In Manhattan, San Francisco, Seattle, San Diego, Los Angeles and other high rent district cities, the savings are obviously substantial.
For employees as well, a lack of commuting is a huge blessing whether by car, bus or train. It’s 1 to 2.5 hours per day freed up for tens of millions of workers who are desperate for leisure time.
After the recent riots, businesses were also suggesting they might move their whole companies out of metro areas. They could save substantially too on taxes, rent, and perhaps be able to pay lower wages. Certainly Mark Zuckerberg felt that such a justification for lower wages exist.
Danger to Cities as Tax Base Erodes
The risk to cities such as San Francisco, Los Angeles, Manhattan, Boston, Chicago, Washington, San Diego, and
losing those tax dollars could cause their tax rates to rise. The cost of running New York is outrageous and the Manhattan New York housing market would have to be on red alert going forward. With tourism down, and debt from the Corona Virus outbreak, New York’s situation might be dire.
Redfin’s CEO Glenn Kelman is talking about how people and businesses are reconfiguring where they want to live. It could be a key moment in history where smaller populated states could draw new residents and capital to grow their cities. See more on the best cities to buy real estate.
The trend out of California has been going for sometime. Once report suggested that 1800 companies left California in one year along. Most of these firms are heading to Texas with its vast real estate possibilities.
The move to rural regions isn’t isolated to the US either. In major cities across the globe, businesses struggling to survive see rural areas as a key component of their survival plan. A report in the UK’s Guardian newspaper explains how the work at home trend is prompting people to reassess their lives and what other options are available.
Searches for “homes for sale Texas” and homes for sale in Florida have jumped since December, something not present in other housing markets. As the pandemic ends for Texas, the Dallas housing market and Houston housing market should rebound, although Florida’s housing market could experience some troubles.
I’d like to hear from you. Have you contemplated moving out of the city? Where would you ideally like to go?