August 2021 Market Report
|Over the past month, countries reopened their borders and Wall Street traders began returning to their desks. But just as life began to flow back towards the familiar, the Delta variant forced cities to reinstate pandemic protocols. That easing and tightening has driven human movement in surprising directions. Let’s dive deeper to see where things are going.
The pandemic sent single-family home prices skyrocketing, while the market value of condos stagnated.
|In large cities, including Los Angeles and San Francisco, condo prices have not kept pace with those of single-family homes in recent years. Pandemic-driven demand for more space accelerated that trend dramatically.
As market conditions and pandemic policies changed, sales of condos in urban areas grew at a record-setting pace.
|As offices in many cities began to reopen, urban condos began to look attractive to buyers priced out of single-family homes. In June 2021, condos sold at the fastest pace on record and more condos sold for above asking price.
In the Bay Area and the rest of the country, the big growth story over the past year has been in suburban and rural areas.
|With commute times less of a concern, home prices rose more rapidly in car-dependent suburban and even quasi-rural areas nationwide. In the Bay Area, price-growth in outlying counties far exceeded that of the traditionally astronomical San Francisco market.
But people are flocking back to cities en masse, and rents have steadily increased after a long pandemic decline.
|During the pandemic, rent prices were hit the hardest in New York City and San Francisco, cities that depend heavily on a workforce that suddenly dispersed. But rent prices in both cities have increased for two quarters in a row, completing the reverse migration pattern to the urban core.
The urban exodus of 2020 turns out to have been only half-true, as most movers stayed within the same metro area.
|With businesses boarded up in major cities, the narrative of urban flight permeated the press. But most people who relocated during the pandemic only shuffled around locally. Only a tiny fraction of coastal city residents moved to the heart of the country.
For the most part, the pandemic accelerated migration patterns already in effect, compressing years into months.
|Last year, New Yorkers and San Franciscans were the most likely to move to other metropolitan areas. New Yorkers moved West and South while San Franciscans were most likely to move to Seattle and Austin, but both patterns started well before the pandemic.
N.Y.C’s stricter return-to-work mandates have resulted in a stronger economic recovery than S.F. or L.A.
|In New York City, Los Angeles and the Bay Area, many of the biggest employers have recovered economically, or are well on their way. But with the loosest return-to-work policies, the Bay Area’s office and job markets have not recovered as strongly.
How far will the trend go? A steep rise in digital nomadism could mean that migration patterns move from places like Boise to destinations like Bali.
|The number of digital nomads increased considerably in 2020, as did the number of long-term stays on Airbnb. With more and more people untethered to permanent homes and physical workplaces, we could see migratory patterns take flight as international borders reopen.
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