Smaller cities for homeowners selling in a hot market to move to include Sioux Falls, Honolulu, Miami, Orlando and Baltimore.
Homeowners who sell in an overheated real estate market face a conundrum. Even though they often sell their homes for more than they ever imagined, they then struggle to find an affordable place to move.
But those questions have created a boom for small cities. Mortgage originations, or measure of completed mortgage loans, in smaller metros saw a jump in the first quarter, according to data from ATTOM Data Solutions, as homeowners cash in their houses and trade for more space and better remote working conditions.
The five cities that saw the largest number of mortgages originated for purchase included Sioux Falls, South Dakota, Honolulu and three locations in the Southeast.
“Rents are back up in many of these metropolitan areas,” said Todd Teta, chief product officer at ATTOM Data Solutions.
Cities with populations larger than 1 million that saw the biggest increase in first-quarter mortgage lending were nearly all Sun Belt locations: Orlando and Miami, Florida, Tucson, Arizona, and Nashville, Tennessee, along with Baltimore. Overall, ATTOM data found a first-quarter jump in mortgage originations in 85 of 211 metro areas.
“You might call them tier-two metropolitan areas,” Teta said. “It’s the next rung there, where folks can get more for their money, where they can work remotely, and they might be trading down from a more expensive home in one of the ‘super-cities.’”
Nick Bailey, president of RE/MAX, noted recent jumps in real estate activity in heartland cities such as Des Moines, Iowa, and Omaha, Nebraska.
“Usually when we see big moving trends, it’s from the Midwest to the coastline. Now, it’s just pockets,” he said.
The hot pandemic seller’s market for homeowners is amplifying existing migration trends away from coastal states.
With the new census, both California and New York lost seats in the House of Representatives. The Brookings Institution said the decennial census data revealed a continuation of the southward migration that has been underway for the past half-century.
In 1970, the Sun Belt states comprised just under half the country’s population. Today, that has risen to 62 percent, a 14 percentage point increase. This increase was roughly split between the South and the Western regions, while the share of population in the Midwest and the Northeast fell.
Experts say it’s no coincidence that the labor market is also gyrating through an abnormal level of volatility.
“People’s willingness to sell and move is an indication of better functioning labor markets,” said Jeffrey Strohl, director of research at the Georgetown University Center on Education and the Workforce. Price appreciation emboldens homeowners to sell and move to where jobs are more plentiful, he said.
Bailey attributed some of the rotation to professionals who bought homes in far-flung locations where they could wait out the worst of the pandemic. Many may have expected to be able to continue working remotely indefinitely, he said. But now many CEOs — particularly in financial services — are aggressively pushing to get workers back into the office.
Now some areas are starting to see a boomerang effect. “Some of the homebuyers that purchased homes a year ago when they thought they’d have a couple years of remote work now are relisting and moving closer back to the city,” he said. “We’re just starting to see that, which is kind of interesting now as companies are making decisions now about remote work.”
At the same time, millions of workers are retiring earlier: The National Institute on Retirement Security found that 26 percent of older adults surveyed said they are planning an earlier retirement because of Covid-19. But when they move, they’re not downsizing, putting them in competition with millennials starting families in greater numbers and keeping prices elevated.
“Baby boomers make up the largest share of sellers at 43 percent. When they do change homes, the square footage difference is only around 100 square feet,” Bailey said. “They’re not significant downsizers.”
Market observers suggest that the exodus of lower-income households to more far-flung, less desirable exurbs could accelerate. “As we see these relocations, we do know that people who once could afford to live within city limits can’t,” Strohl said.
He added that this could serve as a constraint on job growth, potentially putting a drag on broader economic recovery in areas where housing stock is most seriously limited.
“If the least educated workers are in the service sector and they can’t live near their work, that might add to some of these stories we hear about labor shortages,” he said.
Original Article Source: https://www.nbcnews.com/business/real-estate/where-do-you-move-after-selling-hot-market-smaller-city-n1273465