The Millstone Times April 2022

REAL ESTATE

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Zillow&Census Bureau Data Show Pandemic’s Impact on Housing Market Remote Working, Commuting Time, Life Events All Affect Home Buyers’ Decisions FamilyOwned & Operated Born &Raised in Millstone Township EMERGENCY SERVICE AVAILABLE I I SERVICING CNJ SINCE 1960 Lic #9615 • Master Plumber NJ Lic # B109615

The housing market came to a screeching halt in March 2020, when much of the nation shut down in response to the COVID-19 pandemic. But the summer rebound, when many strict lockdown measures were lifted, was big and fast and revealed new homebuying patterns: Americans, many now used to working remotely, began buying farther away from some cities and traditional job centers. Zillow found that nearly two million renters unable to afford homes in metro areas could now afford to buy farther out because they no longer had to commute to work. During a U.S. Census Bureau Local Employment Dynamics Webinar earlier this year, economists from real estate firm Zillow showed how pairing Census Bureau data with Zillow data revealed the impact of the pandemic on housing market trends. Among stats cited: the Census Bureau’s Longitudinal Employer-Household Dynam- ics (LEHD), Origin-Destination Employment Statistics (LODES); the 2018 Ameri- can Community Survey (ACS) 1-year estimates; and the Current Population Survey (CPS), sponsored jointly by the Census Bureau and the U.S. Bureau of Labor Statis- tics (BLS). New for-sale housing inventory improved during the summer of 2020 but failed to keep up with sales growth. In 2020, there were fewer houses for sale (Zillow’s re- search data site) than in 2019, which created a home buying market with hyper-com- petitive conditions. When Home Is Where the Work Is Even before the pandemic, 2020 was expected to be a big home-buying year because of the wave of millennials reaching home-buying age. More than 72 million were in their 40s, the prime age to buy a home. Then COVID-19 happened and many of these millennials found themselves work- ing from home. Zillow found that nearly two million renters unable to afford homes in metro areas could now afford to buy farther out because they no longer had to

commute to work. As a result, many renters became homebuyers and home and rental prices diverged around the time the pandemic hit the United States. But lower-income households more likely to rent were also more likely to have ex- perienced job loss in hard-hit industries, such as retail trade, accommodations, and food services. Those facing financial pressures turned to alternatives, including “doubling up” or moving back in with their families, according to Zillow research. That shift, in turn, added to a decline in rental demand. Did COVID-19 Change Cities? Despite some concern that a pandemic-related mass exodus from metro areas was changing U.S. cities, cities are still very much alive and the housing market in some has even grown. Zillow economists found pandemic’s impact on where people live varied across re- gions. To clearly define urban and suburban, the Zillow Group used a ZIP code classifi- cation system for urban, suburban, and rural areas. It then combined them with Census Bureau variables, such as population density, age of housing stock and other variables. In cities in the Northeast and West regions like New York and San Francisco, home value growth trailed the suburbs, but the opposite happened in markets in the Mid- west. For example, home values surged the city in the Kansas City and Cleveland metro areas, where urban prices were relatively affordable. Basically, it appears that people in larger, more expensive metros were not willing to pay premium prices for proximity to amenities that were no longer available during the pandemic, like restaurants, museums, and theaters. But demand boomed in more affordable urban areas.

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