A new report on rental migration in the first quarter of 2021 from the rental search platform Apartment List points to an interesting development in the urban areas of America. According to the report, the rumors of her death appear to have been grossly exaggerated.
While the US real estate market plot last year focused on urban exodus and the shift in tenant and buyer preference to lower density, rental search activity reflects less an “urban exodus” than “urban exodus” ‘Da more and more tenants are trying to move into the high-density centers of the American superstar cities.
Apartment List’s report found no measurable increase in searchers from high-density cities looking for lower-density cities or metros. When planning cities in which tenants more or less often look for their next home outside the city, Apartment List found that there was no correlation between density and the desire to move out of the city. Many of those looking to move to a new city, according to Apartment List, were looking for rental properties in high-density cities that were made more affordable by moving out in early 2020.
“Cities are resilient,” said Rob Warnock, senior research associate at Apartment List. “We’re seeing data that tells us that the idea of the pandemic causing an exodus from cities was really only half the cycle. People went down in 2020, rents went down and vacancies rose … but we are now seeing how the market reacts to that. Prices have come down, leading people to believe that they might be able to afford to live in New York now, and they are starting an apartment hunt that they may not have started a year earlier. Now rents are rising again and vacancies are falling, leading us to believe that we are in the next phase of the cycle, which is urban exodus. “
Warnock noted that the decisions tenants are now making are very different from what they were thought a year ago. In March 2020, it seemed pointless to live in a city without access to the amenities and culture that make cities worthwhile. Now that vaccination rates keep getting higher and economies reopen, renters are seeing an opportunity to really enjoy the cities again.
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Warnock explained that this urban exodus doesn’t necessarily contradict the history of strong real estate markets we’ve seen in the suburbs and other sparse areas. Home buyers apparently still want to live in lower density single-family homes. He speculated that many of the people moving to cities have slightly lower incomes or younger people are taking advantage of the new lower rents they can get in exciting cities. While cities like San Francisco and New York are still expensive, the fact that they are perhaps 20% cheaper for renters could lend themselves to a new or old way of life where cities are mostly intended for those on younger or lower incomes. who move to the suburbs to raise families and buy houses as soon as they earn more. It could be the story of the middle of the century again.
Another point that cities are striving for for them, according to Warnock, is that this resurgence has occurred with virtually no immigration. Big cities are such important landing sites for new immigrants, and with the borders largely closed during the pandemic, waves of people just haven’t arrived. If cities can return to growth areas without these arrivals, it will be a positive sign for urban markets.
Warnock believes this sign of urban exodus is positive news for the residential and commercial mortgage industries. On the residential side, he doesn’t see this shift directly affecting the huge demand among first-time buyers, although it may mean they can find more comfortable and affordable rental properties while the market remains extremely competitive. He believes that commercially Mortgage professionalswho have struggled with apartment buildings for much of the past year can count on this news.
“In my opinion [commercial mortgage professionals] should probably be pretty excited, ”said Warnock. “Much of this real estate, especially in cities, depends on there being a lot going on in urban areas and they certainly suffered in 2020…. I think it will be a huge relief for the people in the commercial and multi-family real estate sectors to see people return to the cities and feel comfortable in the cities again. “