In March 2020, my life and the lives of billions worldwide entered some of the most unprecedented times seen in generations. There wasn’t much that was certain, except for the amount of time spent at home. At the start of the pandemic, I lived within eyesight of New York City and its abundant offerings in Hoboken, New Jersey. When I first moved there in 2019, living in a home the size of a two-car garage seemed like a non-issue, as I planned to spend the majority of my time enjoying what NYC had to offer. But what started as a move to be situated in the mix of it all turned out to be placing myself at the heart of a COVID-19 hotspot.
Stay-at-home life looked slightly different for everyone. For me, it was dueling Zoom meetings in makeshift home office setups, ad-hoc exercise areas in the living room, and wishing I had even a sliver of a yard to enjoy some fresh air.
Like so many others, I now stand with a new perspective of what I want in a home. I wanted less density and more space. I wanted affordability and ample amenities.
I’m now writing from West Palm Beach, a resort town on Florida’s East Coast. I had been searching for a job that would allow me more flexibility in where I live and, after finding one here at Knock, I relocated.
However, this is just my story. The pandemic has impacted everyone differently and we at Knock wanted to better understand the effects of relocation trends from the pandemic. We commissioned HarrisX to survey over 2,000 homeowners across the U.S. to see how the pandemic impacted their decisions on moving.
Here’s what we found.
There were three key themes from the survey that stuck out to us:
- A preference for larger homes
- The desire to relocate out of urban areas
- A new prioritization of where people live over their job
To better understand these themes, we dug into the data.
What do people want in a house?
According to our survey results, over half of respondents who purchased a new home in the last 12 months wanted more space. To see if price appreciation would have accelerated for larger homes more rapidly than smaller homes in the last year, we looked at the pace of appreciation for price per square foot over the last four years, segmented by home size (focusing on two large, stable markets: Atlanta and Dallas).
Analysis on Atlanta’s metro area via FMLS resale data shows the price per square foot on larger homes is rapidly converging with smaller houses.
For Atlanta, 2020 saw similar increases in price appreciation across home sizes; however, we see a convergence on that price appreciation in 2021, as price appreciation of larger homes has continued to accelerate near levels of smaller homes. It’s also worth noting, the 2020 year-over-year percent change of homes sold above list price show those 4,000 square feet and up increased nearly 78% from 2019, compared to only 24% for homes 1,000-2,000 square feet.
Dallas-Fort Worth went through an even stronger preferential shift for larger homes in 2021 with homes over 4,000 square feet with the largest increase year over year. Similar to Atlanta, the 2020 year-over-year percentage of homes sold above list price that are >4,000 square feet increased 73% versus 28% for homes 1,000-2,000 square feet.
For this apparent increase in demand for larger homes, we also wanted to see if that was impacting new construction. The National Association of Home Builders has also reported a similar trend for single-family home size amongst new construction across all regions of the United States, in their article released earlier this year.1
After a decline in median square footage that they say began in 2016, there has been a stabilization of this downtrend amidst the coronavirus pandemic. The Association projects average home size to increase in the coming months as homebuyers continue to look for more space.
Where do people want to live?
The answer (according to the survey results)? Out of urban areas. 75% of respondents who relocated in the last year chose to live in either suburban or rural locations. To look at this on a wider scale we looked into the Census Bureau’s Historical Migration and Geographic Mobility data from 2014 to 2020, that tracks net migration (difference between the number of people moving in vs. out of each area) by metropolitan status.2 The chart below shows the percentage of net migration of suburban areas has increased 14% year over year for 2020, while principal cities (the largest city in a metropolitan area) have seen a 3% decrease.
To see what that meant for pricing, we assessed how prices were appreciating relative to metro areas from 2017 to present. The maps below show price per square foot on a gradient scale of lowest (white) to highest (dark blue) price for the greater Atlanta and Dallas-Fort Worth metros.
This price appreciation across the board has grown in larger distances from both inner-city Metro areas over time, but most notably in 2021. As the maps reflect, homebuyers are paying what were once inner-city premiums for suburban/rural locations, a trend we don’t see stopping soon.
So, just how far are people going?
Nearly 60% of respondents relocated to a new city within the same state in the last 12 months as more people realize they can work remotely and live wherever they want. Half of those looking to move in the next 12 months share the same plan for relocation. This trend of ‘new city, same state” relocations was also seen by MYMOVE.com’s study of user accounts, who signed up for their moving services.3 The company reported trends of movers who filed their change of address forms, swapping urban centers for their suburban counterparts within their relative regions.
To provide better color on the length of these moves, the Census Bureau’s Distance of Intercounty Mover data from 2001 to 2020, shows a 12% increase year-over-year in moves that are 50 to 199 miles, from 2.5 million in 2018-2019 to 2.8 million in 2019-2020, but a stark drop off in long-distance moves of 500 miles or more.4
This increase in mid-distance intercounty moves throughout the country amidst the Coronavirus pandemic suggests buyers are taking even larger shifts away from crowded metro centers when compared to prior years.
Furthermore, Stephan Whitaker, a policy economist at the Federal Reserve Bank of Chicago, studied interregional migration by these metro classifications:
1. High-cost, large metro areas (population of 2 million or higher)
2. Lower-cost, large metro areas (population of 2 million or higher)
3. Midsize metros areas (population of 500k-2 million)
4. Small metro areas (population of 500k or less), towns, and rural areas
He found in all categories, a higher rate of outmigration to lower-costing metro areas than those immigrating to high-cost metro areas.5 This domino effect of outmigration from metros to those in the category below it, showed higher than average year-over-year rates of relocation when compared to prior years during the same period. However, those who were relocating from high-cost, large metros had an even starker increase to mid-sized metros, as opposed to lower-cost large metros in the tier below. This jump suggests an even further shift from the dense population cores than in previous comparison years of 2017 to 2019 for this study. To note, this trend of net outward migration from large, high-cost metro areas has always occurred, but the pandemic sped up the rates of this trend.
To assess whether specific cities saw an uptick in demand coinciding with the pandemic, we looked at Redfin market indicators across all metros throughout the US, focusing on year-over-year increases from April to December of 2020.6 We ranked all metros across the following metrics: median price increase, percent of home listings off the market in two weeks, inventory drops, sold above list, and home sales. The following 10 metros ranked the highest on average across these categories:
- Camden, NJ
- Ogden, UT
- New Brunswick, NJ
- Virginia Beach, VA
- Boise City, ID
- Provo, UT
- Riverside, CA
- Sacramento, CA
- Tulsa, OK
- Elgin, IL
Year over year, from April to December of 2020, these locations have, on average, experienced 12% median sale price increases, 41% decreases in inventory, and nearly 35% decreases on average days on the market.
Curious if these metros were located near larger, denser cities, and if a demand uptick may be tied to outmigration from large urban centers, as Stephan Whitaker’s study suggests, we mapped principal cities below with a 150-mile radius.
Almost all 10 fall within 5 to 110 miles of larger principal cities, with two exceptions. Both Virginia Beach and Boise, are their states’ principal cities, seeing an influx for their affordability and quality of life when compared to other areas in their state (for Virginia Beach)7 and out of state (for Boise)8. Here we can extrapolate to a certain degree that buyers swapped areas like New York, Philadelphia, Chicago, Washington DC, Salt Lake City, San Francisco, and Los Angeles for smaller counterparts in intra regional shifts.
As per our survey, we found the top three reasons for relocation include 1. Homes in the price range and features you wanted (39%), 2. The outdoor space desired (39%), and 3. Homes with the space, and size you wanted(38%).
According to Redfin data for median sale price for 2019, the top destinations with increased demand were all lower in price than their principal cities. These decreases ranged anywhere from $10,000 to nearly a million dollars when comparing the overall April to December monthly averages.6 The East and West Coast saw higher levels of differentiation when it came to the disparities in price with San Francisco ($1.4M) and Sacramento ($413k) having nearly a million dollars between them, and $230k between New York ($553k) and New Brunswick ($322k). While more central states like Utah saw earnest jumps in median home value from Salt Lake ($343k) to Ogden ($293k) and Provo ($331k), as well as Chicago ($248k) to Elgin ($226k).
And while lot size variances from city to city are hard to come by to compare outdoor space, the trust for public land is the national gold standard for comparing cities’ park systems across the country. The index measures park systems according to the following five categories: access, investment, amenities, acreage, and equity.9 All relocation areas (with the exception of Riverside, CA at 51) scored over the national average park score index of 55. To highlight a few, Camden (98), Sacramento (83), and Ogden (79) achieved some of the highest scores.
Furthermore, as we would expect, when comparing the April monthly average of median pending square feet between the relocation towns to their neighboring major metros, the average square foot increase of home size in the relocation destinations was 195 sqft higher than their larger neighboring metros.6
Businesses too are dispersing, according to Crunchbase’s analysis on venture funding in the US last year. The company reports recent shifts in funding across the country outside of the traditional areas like California, Massachusetts, and New York, which we have been accustomed to for decades.10 The top states experiencing the most venture capital growth include: Michigan, North Carolina, Texas, Washington, and Georgia. This shift into what they call “secondary markets” can be seen as a maturation of the tech and startup universe. The article also attributes this to “entrepreneurs waking up to the idea that a successful company can be started anywhere as tech talent increases and reaches across the country.”
Furthermore, our survey shows 53% of people who recently relocated in the last 12 months, are either working remotely or have a hybrid working arrangement. Jean-Francois Marcoux, managing partner at White Star Capital, a venture capital firm that invests in digital workplace startups, believes this number will only grow larger when asked his thoughts on the future of people working remotely: “Even before COVID, some of the trends were pretty positive on that, and I think it will just get better.”11 COVID-19 in the last year tested company limits everywhere on their collaboration and infrastructure in place to do so, but those growing pains were steps toward the future. For many sectors, this remote trend can expect to continue in the coming years at even higher rates.
The data seems to support the themes surfaced in this consumer survey: there has been an increased demand for more space, both in home size and distance from the urban cores. If this shift in demand continues, which the survey results suggest are likely, a natural next question would be, what are the implications on the housing supply with such a drastic, and possibly lasting, shift in demand? While you’ll have to wait until our next article for the answer to that question. We can, however, offer a solution for buyers to keep up with this increasingly competitive market in real time. The Knock Home Swap allows homeowners to buy their dream home in markets across the country with a non-contingent offer before they sell, giving them certainty and buying power in today’s hot housing market.
Findings are based on an online survey of 2,012 U.S. homeowners nationwide over the age of 18 conducted by HarrisX from April 28 – May 4, 2021. The sampling margin of error of this poll is plus or minus 2.18 percentage points. The results reflect a nationally representative sample of adult homeowners in the United States. Results were weighted for age, gender, region and race/ethnicity where necessary to align them with their actual proportions in the population.
FMLS Resale Data was pulled for the years of 2017-2021 for the Greater Atlanta and Dallas MSA areas for homes 1,000 SF and up. We excluded the top and lowest .10 % to normalize data for outliers. Data was analyzed on a year over year percent increase basis.
- National Association of Home Builders, and Robert Dietz. “Growth Ahead for New Single-Family Home Size?” eyeonhousing.org, https://eyeonhousing.org/2021/02/growth-ahead-for-new-single-family-home-size/.
- Table A-1. Annual Geographic Mobility Rates, By Type of Movement: 1948-2020. December 2020. CPS Historical Migration/Geographic Mobility Tables, United States Census Bureau, https://www.census.gov/data/tables/time-series/demo/geographic-mobility/historic.html.
- Bowman, Cynthia Paez. “Coronavirus Moving Study: People Left Big Cities, Temporary Moves Spiked In First 6 Months of COVID-19 Pandemic.” MyMove.com, 2021, https://www.mymove.com/moving/covid-19/coronavirus-moving-trends/.
- Table A-6. Distance of Intercounty Move: 2003-2020. December 2020. CPS Historical Migration/Geographic Mobility Tables, https://www.census.gov/data/tables/time-series/demo/geographic-mobility/historic.html.
- Whitaker, Stephan D. “Migrants from High-Cost, Large Metro Areas during the COVID-19 Pandemic, Their Destinations, and How Many Could Follow.” Clevelandfed.org, Federal Reserve Bank of Cleveland, 25 March 2021, https://www.clevelandfed.org/newsroom-and-events/publications/cfed-district-data-briefs/cfddb-20210325-migrants-from-high-cost-large-metro-areas-during-the-covid-19-pandemic.aspx#D3. Accessed May 2021.
- Home Prices, Sales & Inventory. 2021. Redfin Data Center, https://www.redfin.com/news/data-center/.
- Rhode, Jeff. “A Look at Virginia Beach’s Real Estate Market For 2021.” Learn.Roofstock.Com, Roofstock, Jan 2021, https://learn.roofstock.com/blog/virginia-beach-real-estate-market. Accessed 2021.
- “Where are Americans Moving?” Northamerican.com, North American Moving Services, 2020, https://www.northamerican.com/migration-map#:~:text=Illinois%2C%20New%20York%2C%20and%20New,Carolina%20from%20the%202019%20results. Accessed 2021.
- “2021 Park Score Index.” tpl.org/parkscore, The Trust for Public Land, 2021, https://www.tpl.org/parkscore. Accessed 2021.
- Metinko, Chris, and Gene Teare. “More Opportunity Than Capital: Venture Dollars Spread Throughout the US.” News.Crunchbase.com, Crunchbase, May 2021, https://news.crunchbase.com/news/fastest-growing-states-venture-capital-investment/. Accessed 2021.
- Finnegan, Matthew. “VC money flows to collaboration start-ups as remote work booms.” Computerworld.com, June 2020, https://www.computerworld.com/article/3562707/vc-money-flows-to-collaboration-start-ups-as-remote-work-booms.html. Accessed May 2021.