July 2020 Cross-Market Demand Report: More Homebuyers Looking to Move Despite COVID Concerns

July 2020 Highlights:

  • The share of homebuyers in the nation’s largest metros looking to move outside of their home metro has increased, compared to last year.
  • Within the largest 100 metros, urbanites are increasingly looking to move to suburban areas.
  • Northeastern markets have seen an improvement in demand from homebuyers in other metros across the country last month, while Southern markets saw a marked decline.

Cross-market home shopping activity has rebounded in the nation’s 100 largest metros, after a slow second quarter which commenced with far fewer home shoppers searching outside of their home metro than last year. Northeastern metropolitan areas, which have more successfully contained their spread of COVID-19, benefited most from this uptick in cross-market activity. Compared to earlier in the spring, Northeastern homes reaped an increasing share of homebuyer interest compared to other regions across the country. 

More Homebuyers Looking to Move

At the beginning of April, only 46.5 percent of home searches were targeted at homes outside a searcher’s home metro area, down 1.5 percent from last year (Figure 1). As local economies began to gradually re-open, home shoppers increasingly looked outside their home metro area. The share of home shoppers searching outside their home metro now stands at 48.8 percent, up 0.3 percent compared to last year. Although this share is higher than last year, the pre-COVID long-term trend already showed affordability concerns driving an increasing number of home shoppers from the nation’s largest metros to search outside of their home metro area. Whether this long-term trend continues and amplifies further through to the end of the year is dependent on how metros across the country handle a renewed rise in COVID-19 cases, as they face difficult decisions pertaining to how, when, and how much to re-open their local economies.

Figure 1: Average Share of Searches Outside of Home Metros in the Nation’s 100 Largest Metros

Average Share of Searches Outside of Home Metros

Cross-Market Activity Returns to Normal in the Northeast

Home shoppers in Northeastern metros were the first to decrease the rate at which they searched for homes outside their home metro as their local governments implemented physical distancing measures in response to COVID-19 (Figure 2). While the share of home shoppers searching outside of their home metros decreased in all regions at the initial height of the first wave of the pandemic, home shoppers in the Northeast decreased their share by as much as 3.6 percent compared to the year before. In April, home shoppers in the Northeast reversed direction and greatly increased the rate at which they shopped for homes outside of their home metros, which peaked at 3.6 percent greater than last year in mid-May. This surge can be partially attributed to a pent-up backlog of home shoppers who initially planned to move out-of-metro but postponed their plans. Currently, as metros in the Northeast have largely contained their COVID-19 cases, cross-market home shopping activity has resumed to normal levels.

Fewer People Looking to Move in the Midwest

In the Midwest, cross-market activity was heating up before the pandemic hit but has failed to regain strength since. Midwestern metropolitan areas saw the rate at which home shoppers searched outside their home metros almost consistently decrease since February, other than a small improvement in May. This signals that midwestern metros are likely still struggling to return to normal.

Southern Shoppers Expected to Temporarily Pause Plans to Move

In the South, cross-market activity dropped much later than the Northeast and Midwest, with a noticeable disruption starting later in March. Since late May, the share of home shoppers searching outside their home metros in the South has increased consistently, to levels higher than last year. Currently, the share stands at 47.7 percent, up 1.0 percent from last year. However, as cases of COVID-19 continue to sharply rise, particularly in the South, it is expected that home shoppers within the hardest-hit Southern metros may once again temporarily pause plans to move, driving the share of those looking out-of-metro down. In addition, if local governments implement physical distancing measures as comprehensive as those that were enacted in the Northeast, it is likely that Southern home-shopping activity, and particularly cross-market activity, will see a sharp temporary decrease similar to what happened in the Northeast. If such measures are not enacted in the South, how buyers respond would be a test of whether government rules or buyer concerns are most responsible for the downturns observed in the market.  

Remote-Work Policies Possibly Driving Desire to Move in the West

In the West, cross-market activity, represented by the share of home shoppers searching outside their local metro, was already slightly decreasing before the initial wave of the COVID-19 pandemic hit. This cross-market activity decreased further and has only recently reversed-course. It is possible that the prevalence or expected prevalence of long-term remote-work policies in tech-driven Western metros could drive more home shoppers to search further afield than last year. Our research has shown that in the West, 2 in 5 home shoppers reported working from home as a result of COVID, and half expect at least occasional remote work to be the way they operate for the foreseeable future.

Figure 2: Average Share of Searches Outside of Home Metros in the Nation’s 100 Largest Metros, by Region

Regional Average Share of Searches Outside of Home Metros

Within Large Metros, Suburban Areas Gaining in Popularity

Within the largest 100 metros, home shoppers were searching for homes within suburban areas more than ever before. Although views to suburban areas declined relative to urban areas at the initial outset of the outbreak, this quarter, urbanites within the 100 largest metros were shopping for suburban homes more than previous years, as 51% of their views to properties within their home metros went to suburban homes at the end of June, compared to 50% at the same time last year (Figure 3).

Figure 3: Share of Views to Suburban Homes From Urban Home Shoppers within the 100 Largest Metro Areas

% of Total Views from Urban Shoppers to Suburban Areas, 100 Largest Metros

Q2 Saw Large Northeastern Markets Lose Popularity Post-Pandemic 

When looking at changes in the total share of out-of-metro views each market holds, there was a noticeable second-quarter decline in interest in particularly hard-hit northeastern and midwestern metros such as Philadelphia, Boston, Pittsburgh, and Chicago (Figure 4). New York, while also hard-hit in the initial COVID outbreak, saw relatively less of an outflow of home shopper interest. This is primarily due to the New York Metro encompassing a wide area, including cities in New Jersey which have fared better than New York City itself. Smaller northeastern metros fared better, as they attracted home shoppers from harder-hit areas. Smaller northeastern metros which gained in view share included East Stroudsburg, PA; Bridgeport-Stamford-Norwalk, CT; Ocean City, NJ; Atlantic City, NJ (Figure 4). In particular, metros such as Ocean City, Atlantic City, and East Stroudsburg are known vacation home markets, which increases their attractiveness to other Northeasterners looking for an escape. 

In the second quarter, southeastern metros also fared comparatively well, as their open economies encouraged home shoppers to reconvene their search. South Florida metros such as Miami, Cape Coral-Fort Myers, and Port St. Lucie gained in share compared to last year. However, Florida metros north of Miami, such as Tampa, Orlando, and Palm Bay, saw their share of home shopping interest decline. In Texas, Dallas also saw large gains compared to last year, and many southern markets in the States of Mississippi, Alabama, Georgia, and South Carolina also saw modest gains. In the West, Southern California saw the biggest gains in interest over the past year and Northern California remained relatively cool. Los Angeles, Riverside-San Bernardino, and San Diego lead the second quarter with the biggest gains in out-of-market interest in the West. 

Figure 4: Q2 2020 Out-of-Metro View Share vs Previous Year

In July, A Trend-Reversal Sees Northeastern Markets Heat Up, Southern Markets Cool

Since July, many Northeastern markets recovered and saw an uptick in interest. Philadelphia, Boston, Pittsburgh, and Chicago, while still declining in view share compared to last year (Figure 5), improved greatly over the past few weeks (Figure 6). New York is seeing both an increase in cross-market interest compared to last year, and an acceleration in it. In fact, almost all northeastern metros within New York’s area of influence are seeing positive signs of growth. Across Pennsylvania, New Jersey, New York, Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire, and Maine, smaller metros saw an increase in housing demand. This demand was primarily fueled by home shoppers from New York, however, buyers from Philadelphia, Boston, Washington, and Baltimore also topped the list of viewers. Within the New York Metro Area, the New York City boroughs of Manhattan and Bronx saw a small but continued worsening of demand from out-of-county home shoppers since the second quarter (Figure 7). However, Staten Island, Brooklyn, Queens, and many other counties within the metro area saw an improvement in out-of-market demand. Nassau and Suffolk County, NY; and Monmouth and Ocean County, NJ; saw the greatest improvement in cross-market demand since the second quarter. These markets were primarily driven by home shoppers residing in New York City.

Meanwhile, Southern markets have greatly decelerated compared to the second quarter. In July, previously hot metros such as Houston and Miami cooled considerably. The greatest deceleration from the second quarter to July was seen in Phoenix, Tampa, Atlanta, and Dallas (Figure 6), but markets across the South-West and South saw homebuyers begin to pull-back. There were some exceptions to this rule, however, including smaller metros nearby Charlotte, NC, such as Asheville and Cullowhee, as well as south-eastern Florida metros such as North Port-Sarasota-Bradenton, Cape Coral-Fort Myers, Key West, Naples and Punta Gorda (Figure 6). Most demand for homes in these five Florida metros came from home shoppers in Miami. However, Tampa, New York, Chicago, and Orlando are other top viewers of these metros.

In the West, Seattle, Portland, Los Angeles, and San Diego cooled, while Riverside-San Bernardino, San Francisco, and Sacramento saw an improvement in out-of-market homebuying interest. Demand in Riverside was heavily driven by the cooling Los Angeles market, although San Diego home shoppers were also searching in this area. San Francisco’s out-of-market demand was primarily driven by San Jose, and Sacramento homes were primarily viewed by home shoppers from San Francisco, San Jose, and Los Angeles.

Figure 5: July 2020 Out-of-Metro View Share vs Previous Year

Figure 6: Difference in July 2020 vs Q2 2020 View Share Growth

Figure 7: Difference in July 2020 vs Q2 2020 View Share Growth, Counties within New York Metropolitan Area


Subscribe to our mailing list to receive monthly updates and notifications on the latest data and research.

  

2020 Housing Market Predictions – COVID-19 Update - Realtor.com

Sign up for updates

Join our mailing list to receive the latest data and research.