The mix of working from home and renters seeking more space – albeit cheaper space – is pushing more people out of more expensive U.S. cities and moving into the suburbs.
Particularly, Millennials are fleeing New York City for more space in its surrounding suburbs.
Since the beginning of the COVID-19 pandemic, online mortgage lender Better.com said it has seen an increasing trend in 35 to 36-year-old renters applying for mortgages in the suburbs of New York, including Westchester; Connecticut and Fairfield County; and New Jersey and Essex County.
Better.com, said it’s been seeing record purchase demand in Florida, California, Arizona and Texas and saw a continued trend of first-time homebuyers applying for mortgages in suburban areas.
In an interview with HousingWire, Corey Jones, an agent with Better Real Estate, said that as an agent in New Jersey, he has seen many Millennials fleeing the big city for more space.
“In many cases, [it’s] young couples that are leaving the city looking for opportunities in the suburbs, and there’s no question that this is one of the outcomes of COVID-19 pandemic with work from home policies continuing into, by and large, next year for many of the companies,” Jones said. “Many young people are looking for opportunities to have more space, and at a relatively similar cost if not a little less than what they currently pay in urban settings.”
During March through June in New York City, only 15% of residents made a first-time purchase with Better.com, down from an average of 30% for the period from January through March, pre-pandemic.
On top of that, a report from Douglas Elliman said that in July, Manhattan, New York reached its highest vacancy rate in nearly 14 years of being tracked – 3.67%.
A report from Unison said that the exodus can be categorized into three main groups – higher-income employees and managers who owned properties in both the city and the suburbs moving from their city apartments to their suburban homes; early career workers and students who decided to shelter outside the city with family moved back into family-owned homes in the suburbs; and the vast majority of people in the middle – who moved from a rented city apartment to a new home, newly rented or purchased, in the suburbs – likely nearby.
Jones said that he’s seeing people of all ages flock to the New Jersey area from New York, just looking for some space and affordability.
“We’re talking ages, about 28 to 38, by and large Millennial,” Jones said. “Most of them are married, relatively few [are] single, but most married young couples who are looking to make the move.”
“It is a mix of some who have yet to start a family, and then I’d say there’s a smaller number who have young kids and have to consider schools, community and things like that,” Jones said.
Leonard Guerrero, an assistant manager at JB Goodwin Realtors in Austin, Texas, told HousingWire that he’s seeing the same migration patterns in the Lone Star State, but a significant amount of buyers are coming from the Silicon Valley area. One of the biggest drivers behind this is that vehicle manufacturer Tesla announced it will be building a production plant in Austin.
This $1.1 billion factory could hire 5,000 people over time, according to Tesla.
“The California shift has been seismic,” Guerrero said.
“Austin proper and then even the downtown area with the condos and whatnot, has always been a significant landing point, [so have] high-end Westside properties. . . in West Austin proper,” Guerrero said. “Obviously, Round Rock is high value for your property. In other words, your dollar buys you more there.”
In the Austin area, the spike in demand has far outpaced the inventory, creating a bidding war. But Californians are still looking for a home where everything is bigger, and taxes are smaller.
Better.com said that in the Bay Area, more Millennial renters are applying for loans in suburbs outside San Francisco as well as places like Los Angeles and Austin, Texas.
This year, 59.9% of residents who applied to make a first-time purchase with Better.com in San Francisco applied for a property in the Bay Area. This used to be more consistent, at 63% since 2018.
Two-thirds of San Francisco-based tech workers surveyed by Better.com expressed interest in leaving the area permanently if they could work remotely, which is now becoming more popular for the tech giants.
Google and Twitter are a few of the tech giants that said its employees can work from home indefinitely or at least through the end of the year.
But Guerrero also said that not only are there people moving in from San Francisco, but he has an increase of movers from Florida, Chicago, New York and Washington.
Steve Beaupre, an agent with Compass in San Diego, said that Silicon Valley residents are also moving to the southern half of the state.
“We have a lot of people from Northern California flocking to our market because of so many companies being more open to having their employees work at home,” Beaupre said. “We’re seeing a lot of people from Silicon Valley because it’s so much cheaper relative to San Francisco in the Bay Area.”
“What’s happening is that it’s gotten so expensive and competitive in Northern California,” Beaupre said. “I’ve got literally a handful of different clients just in the last few weeks that have reached out from San Francisco, specifically who are trying to move down here, and still keep their jobs while doing it all remotely.”
A few states over in Salt Lake City, Linda Burtch is the owner of ABODEslc at Keller Williams Salt Lake City and said that she is the busiest she’s ever been in her 13 years of selling real estate.
Not only does she have clients coming in from California, but also Portland, Oregon, Seattle and even New York.
“This market is a really kind of unique market, just because our economic situation is fairly insulated. We’ve got a lot of [tech] industry migrating here, so the job market is really strong,” Burtch said. “And, coupled with housing being more affordable than the coastal places that people are leaving, it’s really attractive.”
Burtch also said that the locals are re-evaluating where they’re living compared to what their needs are, considering telecommuting and working from home.
“A lot of people are realizing that it’s a good time to sell and it’s a great time to buy, with interest rates as low as they are,” Burtch said.
She added that people are also opting to upgrade or change their floor plan to accommodate home offices and those types of things.
Clients in Salt Lake City are also realizing that it’s a good time to sell since there is a two-month supply of inventory – a seller’s market, Burtch said.
“I really think all in all, aside from the pandemic, Salt Lake is experiencing a huge influx and coastal migration just because of the pricing,” Burtch said.
