Work and schools usually drive housing choices. Today, it’s the prospect of remote work and a low-density community. That’s the theory, anyhow, behind an expectation that the COVID-19 pandemic will send home buyers fleeing urban areas.
Not yet, said real estate data giant Zillow.
The company said that April web traffic for its Twin Cities metro property listings showed little change between urban, suburban and rural submarkets.
The share of people who viewed suburban properties fell 2 percentage points, to 62.5% of all searches, compared with last year, while the urban searches increased a percentage point, to 23%.
Rural searches also gained a percentage point, to 14% of searches. Overall traffic for the month was up 36% over last year.
Those figures largely mirror national house-search trends, according to Zillow, which earlier released a survey that suggested the growing acceptance of work-from-home arrangements could eventually lead to a boom in the suburbs.
That survey said 75% of those working from home as a result of the coronavirus would like the option to keep teleworking at least half the time, and 66% would be at least somewhat likely to consider a move if allowed to work from home as often as possible.
A shorter commute was less important than more space and a designated office space, which was at the top of their house-hunting wish list. Half the respondents said they would consider a commute up to 45 minutes or longer compared with a previous Zillow survey that said 30 minutes was the maximum commute time they would tolerate.
Zillow economist Jeff Tucker said he was surprised by the number of people who are still willing to move even though they might be more likely to be able to work from home, but said it’s too early to tell how the situation will change.
“There is still very little clarity on just how widespread these changes in remote work policies will turn out to be,” he said. “There is also uncertainty about how long the pandemic will last, and whether some aspects of travel or city life will still be different years from now.”
While housing preferences could change long-term, forcing some buyers to outer-ring suburbs, exurbs and secondary cities, the appeal of urban amenities including restaurants and shops could keep rural areas from seeing the same kind of boom.
“It’s also easy at the moment to overlook all the positive features of living in a major metro area since so many are closed at the moment, which will remain attractive to people choosing their homes over the medium term,” he said.
Home-sales data in the Twin Cities have yet to reflect a deeper decline for urban properties than those in the suburbs.
During April — the first full month of the coronavirus effect — pending home sales across the 16-county metro were down compared with last year at the same time, but on average sellers received 99.9% of their original asking price, according to the Minneapolis Area Realtors (MAR). In Minneapolis, sellers received nearly 101% of their asking price, suggesting stronger demand for a declining number of listings.
Houses in Minneapolis sold 10 times faster than the broader metro, as well, with declines in the average number of days on the market in the city falling nearly twice as fast as the metro overall.
“There isn’t clear evidence that suburbs performed any better than our core cities,” said David Arbit, MAR’s director of research and economics.
He said the rate of decline in the number of signed purchase agreements during April in Bloomington and Eden Prairie was about twice the rate in Minneapolis and St. Paul, for example. The decline in those pending sales was about the same in Minneapolis and St. Paul as in Maple Grove and Lakeville.
He said that despite some skepticism a few years ago, many millennial households have been shifting to the suburbs and will continue to do so, and that nationwide data show a larger share of millennials want to live in the city or in inner-ring suburbs.
He said the future is unknown, and that forces beyond the pandemic will dictate where buyers will want to move.
“It really depends on the length of the pandemic and how the supply picture changes. With our ongoing supply shortage, some home shoppers have gone to new construction in the outlying areas anyway,” he said. “Like anything, that comes with costs and benefits.”