The side effects of this pandemic have caused housing prices in the suburbs to skyrocket. Given the viability of remote work, and given the excessive costs associated with city living, the demand for homes in the suburbs has soared, but the supply has remained the same. Ultimately, this may represent a paradigm shift in what potential-buyers are looking for in a home.
According to Realtor.com, people spent more time looking up homes in the suburbs, than they did looking for homes in major metropolitan areas; most people were looking for homes with large backyards. To be fair, this trend began before the pandemic, but COVID accelerated things.
In August 2020, buyers’ interest in suburban homes jumped 53.9% from August 2019; In Los Angeles, the suburbs saw home purchases increase by 56.4% while the city saw a 43.6% increase in home purchases (this simply shows that the number of people looking for homes in a certain area is a reliable proxy for growth in that area). This is good news for people with suburban homes that are looking to sell. As we have mentioned many times, when demand is high and supply is low, prices increase.
It is clear that supply will be low in the suburbs in the future, as the number of homes for sale, in the suburbs, in August 2020 is 41.2% lower than August 2019. In the largest metro areas, the overall number of homes available dropped by 40.2%, while the inventory in cities only dropped by 13.4% (e.g., people are buying homes in the suburbs, rather than the city, at a ratio of roughly 3:1). Keeping with supply-demand equilibrium prices, this rush for suburban homes has caused the listing prices of suburban homes to increase by 7.3% from last year.
In conclusion, homes in the suburbs are becoming very hot commodities, and should be priced accordingly. Areas like Studio City, Sherman Oaks, Encino, and Tarzana meet the criterion that would-be suburban home buyers are looking for, and that spells good things for the homeowners in those areas.
At the Chernov Team we understand that knowledge is power, and knowledge of market trends is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.