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Posted Nov 7, 2020, 2:47 AM
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The City
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Join Date: Jul 2004
Location: Chicago region
Posts: 21,375
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Covid induced flight to the burbs and heartland: Long term??
A Prairie Home Contagion
In the booming world of homebuilding, major players are stampeding into parts of the country long overlooked. All signs point to an escape from NewYork — Kansas City, here I come.
By Ashley Gurbal Kritzer
Senior Reporter, Tampa Bay Business Journal
Quote:
America’s heartland is positioned for a post-pandemic housing boom if current trends continue.
In greater Kansas City, approvals to build single-family homes were up 26% year to date through September. So, too, were the Rust Belt cities of Columbus, Ohio, and Fort Wayne, Indiana. Near Fort Collins, Colorado, they rose 47%, and the rural area around Clarksville, Tennessee — just north of Nashville and south of the Kentucky border — reported a 63% increase, tops in the country among major metros The Business Journals analyzed.
Robert Dietz, chief economist for the National Association of Home Builders in Washington, D.C., said it’s no surprise the country’s biggest homebuyers are thundering into more rural, less populous, areas of the country. He said the coronavirus and its effects on remote-work policies have turbocharged buyer demand for bigger homes and a flight from congested urban areas, a trend that’s already triggered a surge in building activity in places long dismissed as too far-flung from hot job markets and top-ranked research clusters.
Meanwhile, the reverse is playing out for many of the priciest and traditionally most sought after housing markets.
Among the 354 metropolitan areas The Business Journals analyzed, 236 reported year-to-date increases in single-family building permits through September, with areas in the Midwest and South recording the largest increases. Conversely, pricier and more congested metros — most notably California’s Bay Area as well as Denver and New York City — saw the largest one-year declines.
“Columbus and Indianapolis — those kinds of cities are going to emerge as winners over the next few years,” Dietz said.
Indeed, Covid-19 has relegated people to their homes for activities once reserved for commercial real estate. Home schooling, home workouts, home offices — all are driving buyers toward larger residences. And because they’re spending less time commuting, those same buyers are proving increasingly willing to move farther from city centers to larger spaces at affordable prices.
The phrase “drive ‘till you qualify” was a mainstay in the housing runup of the early aughts. In those days, spurred by lax mortgage requirements, buyers flocked to the affordability of distant exurbs. The pendulum has swung back in the exurbs’ favor, as the novel coronavirus has consumers rethinking their homes — and driving ‘till they qualify — now that remote work appears here to stay.
“It’s a function of the fact that telecommuting increases the ability of renters and homebuyers to expand their tolerable commute times,” Dietz said.
None of which has escaped the nation’s homebuilding giants. In recent earnings calls, Miami-based Lennar Corp. said that most categories of its home sales rose significantly year over year and that it was “ramping up” land purchases to keep pace with homebuilding. Likewise, PulteGroup Inc. CEO Ryan Marshall recently said signs of an emigration to the ’burbs already are afoot.
Pulte’s share price through Oct. 26 was up 10% for the year, and Lennar’s climbed 34%.
“While we can debate the magnitude, ZIP code-level analysis on buying patterns points to a movement of renters and homeowners from urban centers into the surrounding suburbs,” Marshall said during the company’s second-quarter earnings call.
Meanwhile, all signs point to a continued expansion of homes’ average size.
In a September housing report, Moody’s Investor Services said “the new realities of virtual living” have given new value to amenities such as space, flexible layouts, backyards and customized technologies.
“These factors contributed to favorable demand trends amid the pandemic, which we believe will continue for years to come, including after the vaccine is found and risk of Covid-19 infection subsides,” it said.
Housing experts said the shift could push the average U.S. home to roughly 3,000 square feet, or 37% larger than it was 20 years ago. According to the U.S. Census Bureau, 46% of new single-family homes topped 2,400 square feet in 2019, versus 34% in 1999.
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https://www.bizjournals.com/chicago/...om-cities.html
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