Boom, Gloom & Zoom – The New Housing Market For The 3 Americas

NPR Planet Money:

The Boom:

First, the happy America. The boom. As we reported on our daily podcast The Indicator, the housing boom is fed by low interest rates, millennials reaching home-buying age and a demand for more space. Many Americans — especially 30-somethings who remain employed — are ditching their tiny rental apartments in hip districts of expensive cities and moving to buy houses in more affordable cities or the burbs for a life of shopping at Home Depot and spending their Friday nights eating mozzarella sticks at Applebee’s.

“If you look at basically any metropolitan area, you see the most price competition on the outskirts of that area and the least in the city center,” Fairweather says. Spacious, single-family homes are particularly in demand. We’re not witnessing the death of cities — in fact, most cities are seeing a boom in home prices too — but with remote work freeing many people from daily commutes, people are increasingly deciding that it’s OK to live farther away from what used to be the office. You can see it in Redfin’s data, which show more searches and higher price increases in suburban and rural housing markets.

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The Gloom:

“On the rental side, that’s where we really see the shortfall in demand you would expect in a recession,” Tucker says. “There’s a huge shortfall in rental demand right now.” Vacancy rates are climbing in cities around the United States.

In normal times, it would be good news that rents have stopped rocketing and are even falling significantly in cities like San Francisco and New York after a long period of astronomical increases. This seems to be playing out much differently than during the last recession, when home prices plummeted but rents did not.

But the emptying of apartments and the fall of rents is because of the pandemic and the collapse of employment, especially in the in-person service sector in U.S. cities. Almost 30 million Americans are currently receiving some form of unemployment insurance benefits. For many renters, this government assistance and the Trump administration’s recent order through the Centers for Disease Control and Prevention to halt evictions through December are the only tenuous threads in a housing safety net.

“If you look at basically any metropolitan area, you see the most price competition on the outskirts of that area and the least in the city center,” Fairweather says. Spacious, single-family homes are particularly in demand. We’re not witnessing the death of cities — in fact, most cities are seeing a boom in home prices too — but with remote work freeing many people from daily commutes, people are increasingly deciding that it’s OK to live farther away from what used to be the office. You can see it in Redfin’s data, which show more searches and higher price increases in suburban and rural housing markets

The Zoom:

Truckee, Calif., is a mountain town just northwest of Lake Tahoe. It is sort of an outdoorsy paradise. It has great skiing, mountain biking and hiking opportunities, as well as a river and lakes. It also has some great restaurants and a budding art scene. And if you’re a Bay Area resident in the market for a house, it has another thing going for it: It has a median home price that’s roughly half that of San Francisco, about three hours away.

Like a lot of other vacation destinations — the Hamptons, Cape Cod, Aspen and so on — the Truckee housing market is booming during the coronavirus pandemic. It’s up over 23% since last year, according to data from Redfin, a real estate brokerage. Truckee is part of a trend that realtors and journalists are calling “Zoom towns,” places that are booming as remote work takes off.

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