AUSTIN, TX – COVID has caused changes that are transforming the US real estate landscape. Housing shifts are occurring in some cities in particular as some people trade urban life for suburbs or rural areas, says Jadon Newman, founder and CEO of Noble Capital Group LLC, a private credit and private equity firm.
"Homeownership has traditionally been a way for families to build equity, which is now tougher in densely populated areas with high home prices," Newman told GlobeSt.com. "This is one of the best times in our country's history to build wealth from your home in the suburbs, where prices are often cheaper."
With more people working from home in the current health and business climate, the aspects of city life that appeal to millennials and young professionals such as theaters, bars and restaurants are either closed or restricted.
Real estate analysts say the outward trend towards residential real estate could continue if the pandemic continues. For anyone considering moving out of the city, there are a few key factors to consider.
"Demand for rural and suburban areas is increasing relative to urban demand, which is a big change from where it was previously," Newman told GlobeSt.com. "But the cost of living in the city got higher and higher before the pandemic and now the exodus is accelerating."
People are rethinking life in high-rise buildings with common rooms as amenities or moving into a single-family home with space and a backyard.
"Sellers in the suburbs and rural areas are recognizing the surge in new demand, and it may increase when there is a second wave of the virus this fall," he says.
Newman says those considering a new home or second home should consider these trends in the current economic climate:
Good values in suburbs: Depending on the geographic location, some areas were affected at the start of the pandemic, the property market is recovering and median property prices have risen recently. Newman agrees with analysts who say suburban housing could be a better investment for homebuyers than an urban apartment given the uncertainty about the coronavirus and its multiple impacts on dense population centers.
"Much of the value of homes outside of downtown lies in the structure and the fact that there is room to build more of them," Newman told GlobeSt.com. "Real estate prices outside of densely populated urban areas tend to follow construction costs, so these prices shouldn't move much."
Falling urban property prices: As more people are leaving the city for the suburbs, economists say real estate prices in urban areas could fall as a result.
"But it's too early to count total urban areas," Newman says. "We have had other periods in history when cities survived social and technological change. In the meantime, there can be relative bargains in some markets when considering a city apartment or property for rent."
Lowest Interest Rates in History.
"If you want to own a home, it's a good time to buy it. And it's a good time to sell," says Newman. "For sellers with particularly high demand to move to the suburbs, create a limited one Supply and low interest rates are an incentive to buy. Homes in many regions don't stay on the market for long. "
Small town rentals: Smaller towns and cities may be ideal for residential property investments that can be used as vacation rentals and additional sources of income.
"There could be a major shift from urbanization to investing in remote areas," Newman told GlobeSt.com. "For second home buyers, those well removed from urban centers may be reasonably priced and make more sense as people prioritize safety and more space."