Opinion: Mortgage applications for suburban homes rise as buyers try to escape coronavirus pandemic
““Sell the city, buy the country”.“
The spread of the coronavirus pandemic is having a huge impact on the US real estate market by shaping consumer sentiment and behavior. The public health crisis has caused many consumers to reassess their priorities about what to look for when buying a home. Homebuyers are increasingly turning to less densely populated areas like suburbs, credit consultants say at Caliber Home Loans, the mortgage company I run. Here are three reasons why:
1. Health problems: Homebuyers are asking if their communities have access to testing sites, hospitals, groceries and other amenities that make life easier. Urban areas such as New York City are densely populated, which can lead to the rapid spread of a contagious disease, as happened last spring. Indeed, there was an exodus of those who lived in New York to New Jersey and Connecticut, according to moving services. There are 11 counties around New York and a few around Baltimore which are the most risky housing markets, in which home values could drop significantly over the next few months.
In May there was a 13% increase the number of searches for homes in suburban postal codes, and this trend continues. Our firm handles thousands of requests from potential buyers who wish to move to the suburbs. In metro Chicago and Washington DC, for example, suburban or rural mortgage applications are up 40% from pre-pandemic averages. We are also seeing a flight to the suburbs of the metropolitan areas of Houston, Los Angeles, and Denver, among others, as seen in the table below.
2. Homework: Millions of Americans now work from home, interacting with customers and colleagues online. Commercial rental activity fell more than 20% in the first quarter of 2020. Our homes have become our offices, and this can be a lasting trend even when the world is finally returning to some normalcy. After all, those who work from home were 13% more efficient than their counterparts who did not, according to a 2014 study. $ 2,000 and $ 6,500 by not spending on child care, clothing, gas or parking. Workers may even be happier at home because a recent survey find.
As a result, home buyers are realizing that their living space needs to be optimized for remote working. A recent poll Realtors revealed that the most wanted home upgrade was to have a working home office (even more than a large outdoor space).
3. More space: “Borrowers can acquire more square footage, have a yard for pets and children, while still maintaining a sense of social distancing for health reasons as well,” said Josip Capelj, loan consultant in the Caliber office. in Detroit. Starts jumped 17.3% in June, the largest percentage increase since 2016, based on demand for single-family homes in smaller metropolitan areas and suburbs. If you are going to be quarantined, you may as well do it in a home that has more space and amenities to enjoy. Getting out of a public health crisis in a small apartment is not optimal, which is why many owners have decided to move to the suburbs instead. As one venture capitalist noted Put the, “Sell the city, buy the country.”
Sanjiv Das is CEO of Caliber home loans. Previously he was the CEO of CitiMortgage during and after the Great Financial Crisis
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