At the onset of the pandemic we had to shift our focus from what a city could offer to what our homes could offer, as restaurants, bars and entertainment venues were progressively forced to close. Never in our lives have we spent as much time in our homes as in the last year. Never in our lives have we understood the importance of our living space, to work, to train, to play with the kids, to bake.
High-density cities became less attractive during this particular period, as all the benefits of life in a big city were temporarily unavailable and all the downsides were amplified.
This translated, in the first months of the pandemic, to a race for suburban areas: according to data published by Zillow, a US online housing marketplace, in the period between February and May 2020, house sales volume in the US decreased by 32%: in suburban areas house sales volume decreased by 30% while in urban areas it decreased by 36%. In the same period, the interest to move to more spacious, less crowded and certainly less expensive areas increased considerably. According to an article published by Forbes in October, based on Zillow data, the hottest housing markets for the 12 months through September 2020 were in Idaho, Utah, Oklahoma and Texas, far away from the overcrowded and excessively expensive coasts.
In New York City, house prices had already reached a peak before the pandemic hit, and the lockdown only accelerated the trend of a weakening real estate market. From the beginning of the pandemic through October, inventory of houses up for sale in the city increased 15%. Rental apartments followed a similar behavior and the median market rent in Manhattan fell 21% to levels not seen since 2010. San Francisco, similarly, saw its house for sale inventory increasing by 85% in the same period and a decrease in median rental costs of 18%.
In Europe, similar trends emerged: in Paris at the beginning of the first lockdown about 20% of the population left the city to work remotely in the countryside. Another trend observed in the major touristic European cities is that those apartments that were traditionally used by tourists for short-term stays were converted by the owners end entered the long-term rental market, thus putting further pressure on rental prices.
This tendency shifted in Q4 of 2020: as the news of the first vaccines came out, people started feeling more comfortable and partially moving back to the larger cities. More recent data show a pick-up in housing activity in New York, even though overall sales volume remains well below the pre-pandemic levels.
Going forward, a mix of these two trends is expected. People have now realized the importance of living where they like to live as compared to where they have to live. Many companies have also made public announcements about working remotely to continue when the pandemic will be over. At the same time, as cities continue to reopen, the appeal of living in an urban area starts to increase again.
The most recent surveys on the US housing market for 2021 foresee Austin, TX as being the hottest Real Estate market for this year, followed by Phoenix, AZ and Nashville, TS. These areas are fairly affordable options when compared to expensive coastal cities and thus provide a good value for prospective homeowners, that can there enjoy family-sized homes, booming economies and sunny weather.
We thank you for the continued support.
ALESSIA, LARA, AND JOHN