Are buyers headed to the exurbs?
In the last recession, the exurbs — those areas on the far outskirts of metropolitan areas — were one of the hardest-hit places in the housing market crash. With the extra-long commutes, these areas were the last to recover when the market rebounded.
Fast forward 10 years, and the country is in another recession, but the preferences for housing have changed.
In today’s pandemic environment, there are many reports that buyers are leaving more urban areas and are headed to the suburbs, exurbs and rural areas as they look for more space, fewer crowds, greater affordability and room for additional family members. The rise in at-home work and better connectivity is now making it possible to live in these areas without the long commutes.
There are many stories about buyers whose jobs have changed from in-person positions to remote ones. This is giving buyers a wide range of housing choices. For example, there are stories of people moving from San Francisco to Park City or from West Jordan to Payson as expectations for work have changed.
Some Realtors says buyers are changing their housing preferences, according to a July survey from the National Association of Realtors. Nearly a quarter of Realtors said their buyers had shifted the location of where they intended to buy because of the coronavirus. Among those Realtors, 47% said their buyers prefer to purchase housing in the suburbs, 39% said rural areas and 25% said smaller town markets.
Realtors say buyers are wanting home offices, more personal space and larger yards. Realtors also say 13% of homebuyers have changed their home type of choice from multi-family to single-family.
“Relatively better performance of single-family homes in relation to multifamily condominium properties clearly suggest migration from the city centers to the suburbs,” said Lawrence Yun, chief economist at NAR, in a statement about May existing home sales. “After witnessing several consecutive years of urban revival, the new trend looks to be in the suburbs as more companies allow greater flexibility to work from home.”
One benefit for home buyers who decide to buy in a rural area is they may qualify for a U.S. Department of Agriculture, or USDA, loan. This is a zero down payment loan for rural and some suburban buyers. They are guaranteed through the Department of Agriculture so a buyer can get a low interest rate even without a down payment.
In addition to its guarantee program, USDA also grants direct loans to low-income applicants.
To qualify, buyers must be the primary occupants of the home, must live in a qualifying area, must meet credit standards and cannot exceed income limits.
To learn more about USDA loans, talk to a participating lender.
Some buyers may be nervous to buy in an area that is far from the city because of the last recession. While there are many differences today compared to the situation back then, there are many things you can do to protect your investment when you first purchase a home.
First, make sure you are comfortable with the monthly payment and have enough money in reserve that you would be able to weather a financial setback.
Second, be careful about the property you choose. As you buy, make sure you are thinking about resale value. Make sure to carefully research the surrounding area, especially if it is not developed yet.
Make sure you understand what the community may look like in the future and whether that would be appealing to potential buyers. Will it have commercial properties nearby? Will it be on a busy road? If you buy a home tucked away in a neighborhood that is already fully developed, there may be fewer questions about how the area’s appeal will change in the future.
Finally, as you buy, think about whether the home would attract other buyers. Homes that are quirky or have uncommon features may be hard to sell in the future.
To learn more about housing conditions in your area or to learn more about how to look for resale value, contact a local Realtor. Find one at MyRealtorStory.com.