By Prashant Gopal and Alex Wittenberg | Bloomberg
You may have heard: the pandemic is killing cities and driving a rush to spacious homes in the suburbs. But beyond expensive New York and San Francisco, the demand for real estate in America’s inner cities is booming.
From Pittsburgh to Detroit and Phoenix, condos and townhouses are hot within walking distance of bars and restaurants. Like families now moving to larger suburban homes, young employees are taking advantage of record-low mortgage rates and flexible remote working policies to move to desirable, relatively affordable cities.
House prices in US urban markets rose 15% in the three months to the end of January, slightly above the annual pace in the suburbs. This comes from data from broker Redfin, based on geographic names developed by the Census Bureau. It’s a shift from early in the pandemic when prices lagged or even fell below the outskirts, a sign that Covid-19 vaccines are helping to fuel demand when nightlife returns.
“People expect now is a good time to buy,” said Daryl Fairweather, Redfin chief economist. “You don’t think short term. They look forward to eating in restaurants and attending concerts. “
Perhaps no part of the US economy has been driven more by Federal Reserve monetary policy than housing construction, and with cities now joining the suburbs and suburbs in the boom, the effects on growth appear to be intensifying. In some regions, the urban areas are now doing significantly better.
In Louisville, Kentucky, real estate values in the more populated neighborhoods rose more than twice as fast as the suburbs in the past three months. In Detroit, plagued by poverty but home to a downtown area of shiny new apartment towers, urban prices rose 43%, nearly quadrupling the rate of less dense areas. In urban Baltimore, prices rose 34% while in the suburbs they rose 10%.
Alec Studstill, 36, recently divorced and moved from the Washington, DC suburbs to Baltimore during the pandemic. After Studstill lost a few spots because its listings weren’t competitive enough, he paid about $ 500,000 for a townhouse near the canton’s waterfront. That was exactly at the asking price.
“My lifestyle is a little more active than it used to be,” said Studstill, a management and program analyst with the Securities and Exchange Commission. “I wanted this urban and urban lifestyle, but DC real estate was ridiculous. Baltimore was the next big thing. “
Cities like New York, San Francisco, and Boston – large urban centers with expensive housing compared to the rest of the country – are among the outliers. Shoppers no longer feel entitled to pay top dollars for a tiny room with theaters and bars closed, and denser cities rely on public transportation, which is unattractive during a pandemic.
Long-term guidelines for remote working also mean that some people don’t need to stay near industrial centers, although they may still want the benefits of urban living. Transplants from these locations are instead going to areas like Austin, Texas; Boise, Idaho; and Columbus, Ohio, where they can live comfortably and cheaply.
Take Nick Kraus, a 25-year-old who moved out of the tiny Manhattan apartment he shared with three roommates. The management consultancy that employs him now enables workers to live anywhere. He conducted a scenario analysis and concluded that New York was overpriced and condo fees in Miami were too high. So he settled in Nashville, Tennessee, where he hardly knows anyone, and bought his first home for $ 550,000 that month.
That bought him 2,000 square meters, including three bedrooms and a covered terrace with a bar. The pool and table football are made to order. In the meantime, there’s plenty to do nearby – according to Kraus, there are 10 bars and restaurants within walking distance.
“One of the things I didn’t want to give up when I left New York was the walkability of the city,” he said. “I don’t own a car and I don’t plan to.”
Downtown Louisville, with its high-rise condominium buildings, has something in common with Midtown Manhattan. The office workers are gone, the streets seem empty, and the high-end units aren’t selling very quickly. But buyers, including many from across the country, are grabbing townhouses and single-family homes in the vibrant neighborhoods that surround it.
Prices have long been high in the ornate neighborhoods of Highlands, Butchertown, Crescent Hill, and St. Matthews, which are dotted with murals, ethnic restaurants, and independent cafes. But now they’re skyrocketing, said Libby Loeser, an agent at Keller Williams Louisville East.
For Loeser, who does most of her business in these urban areas, 2020 was her best year since serving as an agent a dozen years ago. Her team sold $ 15 million worth of real estate, up 25 percent since 2019, she said.
“You can list a house two minutes from downtown and will likely have five listings in the first 24 hours,” she said. “There is a younger contingent who are happy to be in these urban areas and will buy this house from the person who wants to evacuate.”
Buyers searching in Pittsburgh changed their preferences during the pandemic and paid a premium on yards and larger homes, said Kelly Hanna Riley, vice president of residential property sales at Howard Hanna Real Estate Services.
“Shoppers in town need to be ready to leave – they can’t pause,” she said. “You need to know that they may go above and beyond the price.”