COVID-19 is Inducing Urban Flight
“As seen in the Real Estate Reality Column in the San Leandro Times & Castro Valley Forum, written by Carl Medford”
With the continuing housing shortage not just locally, but across the nation, home prices are continuing to rise as buyers are throwing multiple offers at almost everything decent. In spite of COVID-19, according to the Federal Housing Finance Authority (www.FHFA.gov), second-quarter overall US home values increased 5.4% from the same period last year.*
With the market looking rosy in most corners of the nation and every major city across the country seeing home values increase, there is one glaring exception. One city where prices have actually declined and where housing inventory is reaching record highs.
It is no secret our country is in a recession and the only two entities that have not apparently read the memo are the housing and stock markets. It goes without saying that any hot market always has a cooler backside and, with high unemployment rates and continued effects from the pandemic, it is just a matter of time before reality comes home to roost in the housing market. When local conditions deteriorate and consumer confidence dips, buyers, sensing the future may be less optimistic, are less willing to buy. This subsequently causes a shift in market dynamics as we start to tilt from a seller’s market to a buyer’s market.
Realtors are constantly looking for signs of an impending shift, and the declining San Francisco and upper peninsula markets (Redwood City, San Mateo, Burlingame) are throwing off clues to which we must pay attention. What begins in one corner of the Bay Area will eventually encompass the entire region.
There are many factors contributing to the shift. COVID-19 has made many employees aware (especially in the tech and related sectors) that they will be working from home for the foreseeable future. This means they no longer need expensive homes located close to their employers. Many are consequently looking to get out of the city and into more affordable locations. Cities like Boise, Idaho are beginning to see an influx.
Additionally, local city and county government’s inability to handle surging homeless populations, talks of increasing state taxes and pandemic-related closings of iconic restaurants, tourist venues, amenities such as theaters and numerous other services are compounding to make urban life dramatically less palatable. Factor in the increased potential for COVID-19 infections prevalent in large urban centers and it is no wonder many are looking to get out of town as quickly as possible.
Carl Medford is a licensed Realtor with Keller Williams Realty and a licensed general contractor. This article is sponsored by the Central County Marketing Association.