For A Tougher Time Ahead, Spottier Opportunities Will Rule

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The highest homebuyer net migration losses have occurred in high-cost, inelastic markets located in coastal areas. Metro areas experiencing the most gains in homebuyer net migration are found more inland and to the South. The map also shows a remarkable threefold increase in homebuyer net migration between the two-year period occurring before and after the first confirmed case of COVID-19 in the country. The pandemic intensified existing migration patterns of homebuyers, driving housing demand to levels far exceeding that of supply. In 2021, the Freddie Mac House Price Index (FMHPI) reported that while house price appreciation rose to historical highs in the United States, the fastest rise occurred for those metro areas which experienced a surge of migrant homebuyers.

Going back to the Lennar example, the company has 36 markets, 19 of which have yet to get tugged into the Great Swoon of 2022, and 10 markets that may go either way, and seven that have succumbed to “fire and ice” economic shocks, requiring a toolkit of pace and price interventions.

Likely what will emerge is that the motivation for payment power – that balance between what a household can take in in wages and where they can make those dollars go the farthest in housing costs – will continue to offer spottier submarket-by-submarket opportunity during an overall tougher macro housing market.

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