The evidence keeps piling up.
By Wolf Richter for WOLF STREET.
Sales of new single-family houses (based on signed contracts) rose 6.9% in June, compared to June last year, to a seasonally adjusted annual rate of sales of 776,000 houses, according to the Commerce Department this morning. It was a hair above January’s 774,000, having recovered all of the plunge during February, March, and April — thereby making it the highest rate of sales since July 2007:
It may be another tidbit in the larger saga of potential shifts in the housing market that were either triggered by, or accelerated during the Pandemic: a shift from condos toward houses, and particularly a shift from condos in large urban centers toward houses in the suburbs, and a focus on new houses, perhaps motivated by the issues and complexities surrounding the viewing and purchasing of an existing home from a homeowner during the Pandemic.
The shift from condo to houses in existing home sales.
The National Association of Realtors reported two days ago that existing condo sales in June (based on closed sales), while it also bounced off the lockdown lows, remained down 23% from June last year, with supply a hefty 5.3 months. By contrast, existing house sales were down only 9% from June last year, with supply a tighter 3.8 months.
And prices of existing homes show a similar divergence. The Median price of single-family houses rose 3.5% nationally, but the median price of condos ticked up only 1.4%, according to the NAR.
In large urban areas, the trends may be steeper. For example, in the San Francisco Bay Area, condo sales in the biggest most urban counties plunged by 16%-34% in June compared to June last year, according to the California Association of Realtors.
And the median price of condos in those counties dropped, and sharply in some of them:
- Santa Clara (San Jose, southern part of Silicon Valley): -10.9%
- San Mateo (northern part of Silicon Valley): -7.8%
- San Francisco: -6.6%
- Contra Costa: -4.8%
- Alameda: -1.5%
Even as condos have come under sales and price pressures, sales of single-family houses in the Bay Area overall declined only 7.8% in June year-over-year, and the median price rose 4.2%.
Something is going on, of which we’re getting to see the first few glimpses.
Back to new houses.
The median price of new houses, as volatile as it is with big month-to-month drops and bounces, has remained in the same range since 2016. The high occurred in late 2017. In June, the median price bounced off the hit it took in May and April, to $329,200, up 5.6% from June last year:
The number of unsold new houses – these are spec houses – declined to 307,000 houses, seasonally adjusted, the lowest since May 2018.
Given the increase in sales in June, supply at that rate of sales fell to 4.7 months, at the lower end of the multi-year range:
I’m still waiting to see if this shift from condos to houses and from urban centers to the suburbs is the early phase of a long-term trend in line with the shift to work-from-home and demographic dynamics, or just a knee-jerk reaction to the pandemic that will blow over and reverse in a few months.
If it turns into a long-term trend, it will have big implications for real estate and for how cities are being structured.
But wait… there’s always the reaction: Drop the prices of these big-city condos enough, and buyers will come.
More signs of a move from the cities to the suburbs? Supply of existing houses is tight; condos are piling up. Read… Home Sales Down -11% from Year Ago, Condos -23%, but Bounce off Lockdown-Lows
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People are also sick of the protests/looting. I know that’s why I moved.
I didn’t believe his comment either.
Sending in jack-booted federal thugs in camouflage with no names/no identification is meant to inflame things. DJT’s puppeteers know he is losing ground every day with the botched Covid-19 response, the 150K dead and the irreparable damage to our economy.
I sold my home because I recognized the market was at/near 2007 level frothiness (aka overpriced) and I was 3 ft above sea level next to a half a mile wide river. Trump thinks his “Law & Order” gum flapping is his path to electoral success.
The only problem? The non kool-aid drinkers recognize him as a life-long criminal who is stealing and grifting, not leading the country. Why did he crap the bed on Covid-19? He saw no way to profit from it and figured lying and PR spinning would fix it.
His incompetence is deadly.
You’re kidding, right Bobby?
Apparently in the past 2 months the ‘code phrase’ from the double income no kids couples wanting to move from Chicago to the suburbs to their realtor is “we always wanted to have a nice backyard!”.
It’s a crazy world with home prices and the stock market pushing higher in a pandemic with high unemployment. Just doesn’t add up to me but I guess I’m out of touch with things…
You mean the protests that happen within a small city block ? People act like it’s a revolution because a few hold up signs and spray paint a police building. Either way, please sell your house so less whiny people can enjoy the city while you isolate yourself in the souless burbs. Where it’s literally such a mental hell hole that kids shoot up their schools.
I agree partly, not with the comment about suburbs being hellholes which is amusing but with the idea that it was not the relatively minor influence of the protests that prompted people to move out. It was the pandemic that is exploding in certain states (including in California where the governor and mayors acted wisely), which is scaring people to move to where they can reduce contact with others.
For a good while, until there is a cure, people are going to be afraid to occupy big buildings with shared elevators, ducting, and lobbies. Airborne transmission is not recognized, so many areas with common air conditioning, like apartment building’s common areas are more dangerous than airports or subways as to risk of infection.
The panic element is always ignored: people have been in denial of their fear and of events and are now accepting both. Even if the real risk of death is 1% with treatment, people have finally ceased thinking of this as being similar to the flu or hoax. The risk of severe, often permanent, physical harm from even asymptomatic infections of this pandemic virus is now well known.
Given the explosions of the original SARS in Hong Kong buildings, I would not want to live in a huge apartment building with shared ducting, elevators, and lobbies myself. Many workers are only working because they have no choice: they must work just to pay rent and put food on their tables.
Huge numbers of businesses are just going to have to close, fully or partially, until there is a cure. I am sorry for this, because, for a huge percentage of these businesses, like restaurants, they are totally blameless and are just like tsunami flood victims. Business interruption insurance should cover many of them, but I suspect that the insurers will find a way to weasel out of paying as often as corrupt judges allow them.
Portland: Multiple government buildings torched, in addition to dozens of businesses being vandalized and/or looted.
San Francisco: Organized looting of pharmacies throughout the area.
Chicago: Dozens dead from above-normal homicides.
Seattle: Multiple deaths connected to riots.
And I’m not even following it that closely. BUT… what I came here to post was that today I saw a half-finished condo(?) building for sale on a “hot” inner-Portland commercial-zone street. Interesting.
No to mention people literally SHITTING IN THE STREETS!!!
Idiot ^
Bob,
That is way too honest and straightforward.
Great news continues for Home owners. Keep up the good work, Wolf.
I thought it was 4 days on the market to sell father in law’s house, but it was actually just 3 days as July 1st was a holiday and the add did not appear until July 2nd. It sold July 4th. (Canada)
The house was empty which made showing easier during the pandemic.
The local market was down a few percent from last year (apparently due to Covid). However, in the 7 years he lived in the place the price appreciated 64%. He had done no maintenance beyond getting some outside taps replaced. The finish was getting a bit tired and the concrete driveway and sidewalks had cracked and settled quite a bit.
He loved that home and we kept him in it until the bitter end. Not only did the place mean everything to him, it proved to be a sound financial investment. All subject to(s) came off this week as a few minor repairs had to be done as per inspection racket.
I know many have lost their shirts panic buying RE at the market peaks. But if a buyer does his/her homework and doesn’t rush RE is and has been a solid investment. Plus, there is no way to put a price on “home”. In the same small city (40K) new home construction is still booming. Booming. There are obviously buyers taking the plunge.
Gold did 77% in 5 yrs and there is no property tax on it
But there is a higher tax rate on it in the USA than other types of gains……….
Only if you report the gains.
Ordinary income tax on sale, home is tax exempt up to $500k if Principal place of residence for 3 of last 5 years, something like that. Gov’t HATES Gold
Bad news for condo owners though. And it’s not as if home owners can monetize this, because if this is a long term move, home owners won’t be selling.
Most people also can afford only one place so if they sell one at a loss, it puts a limit on how much they can put on the next one.
Looks like condo buyers are going to get some real deals a few years from now, at the expense of sellers and banks.
Absolutely. There’s going to be some wealth destruction no matter what.
Would love to know how confident home builders are because they are the smart money here. If they are simply keeping the current pace a few months out, then it could be two things:
1. They think the trend is temporary and/or
2. Economy will be too weak to support more buyers.
After the last RE debacle, I knew people who were buying, at bank auctions, 1BR condos for $18,000 and very nice 2BR townhouses with full basements for $60,000. They quadrupled their money in less than 5 years, with cash flow from renters in the meanwhile.
What a bunch of ripoff prices………..
You could buy entire apartment buildings for $60,000 during the RE bust in Texas 30 plus years ago………..
OK R2/3, when it comes to anecdotes, try this:
From 08-11 a guy I knew was buying houses at the courthouse steps for between #3-6K,,, fixing them another grand or two, then either renting them out and refi them, or selling outright for comp values!
Small town in mid fly over area,,, we are going back there soon, we hope, but not to do that, just buy into the local very rural farm land to get away from the coastal areas once and for eva!!
That’s been my plan since 2017.
The data you collect has only been confirming my theory ever since.
Real estate moves slow and patience is a virtue.
Enjoy the ride while you can. I just sold my home at the end of May and my commercial property closes 8-5. I’m getting out for all of the obvious reasons.
During the last economic crash (2008 with only 1/2 as many people unemployed and no pandemic), home prices bottomed out where I live by 2010-2011). Check back in 2021-2023 and you may see prices lower than 2010-11. Commercial RE is already going in the toilet.
I don’t see the shift out of big cities as principally a Covid phenomenon. It should be obvious that the big cities have a failing civic infrastructure and people and property will not be protected.
There has been a sea change in America, and I don’t see any quick transition to pre-2020 life, and in fact, there may be many permanent (generational) changes in employment, civil cohesion, law enforcement or more specifically, the expectation that law will be enforced at all. As Shakespeare would say, ‘Something evil this way comes….’
Maybe so, maybe no Stephen,
Lot of folks said the same thing in the 68-70 time,,, but most of the ”troubles” AKA ”sea change” went away and most of the folks rioting, etc., were ”co-opted” into the main stream of USA, and I suspect it will be mostly the same this time around too…there were also some very clear findings that some of the worst malefactor/criminal individuals were planted by ray gun and his cohorts as a method of building his reputation for being a ”law and order” guy instead of a wimp and rat that he had already proven himself to be in spite of his on screen image, similar to others of that era.
On the other hand, looking at locations, almost all the lack of law enforcement now is in the larger cities and even some smaller ones where the liberal thinking has become extreme rather than moderate,,,
originally wicked rather than evil per se.
Shakespeare Quote – “Something wicked this way comes”
2nd Witch:
By the pricking of my thumbs,
Something wicked this way comes. [Knocking]
Open locks, Whoever knocks!
[Enter Macbeth]
Macbeth:
How now, you secret, black, and midnight hags!
What is’t you do?
Macbeth Act 4, Scene 1
Yesterday on Zillow I happened to look at two properties for almost the same price. A top floor condo on the riverfront in downtown Portland and a 4 acre mini wine estate just west of the metro area. The house in wine country was twice as big, had a shop and a pool, and was equally finished out. The big difference was that the condo had a $1350 dollar per month HOA fee and property taxes were $1200 per month higher. That could help explain things.
It pretty impressive (read rational) how much cheaper RE (*especially* land) is once buyers liberate themselves from the delusion that they *have to* be in the *most* expensive parts of the *most* expensive cities.
One example, Tesla’s new plant in Austin (which has gotten to be fairly stupidly expensive in Texas terms)…Tesla managed to acquire 2100 acres for just $5 million (under $2500 per acre)
https://www.techandgeek.com/tesla-paid-5-million-for-texas-land-to-build-its-next-factory/
because Tesla (miracle of miracles) had the simple common sense of locating a mere 8 to 10 miles outside the very city center (usual paint huffing hothouse of RE madness).
I know corporate campuses in the burbs are not the same as residential developments downtown, but the common sense logic of trading a little more distance for a lot less cost applies universally.
Tesla – 5.5 cents per square foot… the dirt in Fremont, CA is prolly more like $55/SF. Workers will be able to live more cheaply in Tejas.
This virus likes crowds.So do people.
Cities provide crowds.This is a problem.
Sans a vaccine the trend to the burbs will continue.
Suburbs can have as large of crowds.
Oh hell yeah. I can attest to that. I got Covid in May from a “Suburb”. 105 fever, lucky for me no long term damage. My cousin was not so lucky. Poor girl is going to be on heart medication maybe for the rest of her life.
Big part of the reason I have barely posted her lately
Based on the Covid stats, both of you are considered “recovered” and unless you were admitted to a hospital, you are classified as a “Mild” case. Most people (and the MSM) still only look at the number of positive case vs number of deaths, and think everyone else had a case of the Flu (at the worst). This decease is much more serious than the Flu, with long-term effects that scientists won’t understand for years to come. And you are correct, a 105 fever is serious (to very serious).
As well as solitude, the best of both worlds.
You can run but you can’t hide.
It’s neither. It’s catchup from the lockdowns and indeed, the fall off will begin in June. Cities or their debt laced suburbs are irrelevant. It’s still all concrete slabs, which Suburbs attracted more covid than the city itself.
There is literally zero evidence of a shift from cities to suburbs. It entirely an unfounded media narrative.
Well, I just gave you some data as evidence. All you have to do is look at it. If you don’t look at the data, well then, you don’t see the evidence.
That said, I’m not sure if it’s a long-term trend or just a knee-jerk reaction.
Yes indeed,
you are always moderate and savy looking at facts not opinions
thank you for your blog great work
Wolf, thank you for a great site which I visit almost every day. One question that puzzles me is, if city people moved to the suburbs, where did the suburban sellers move? New construction at an annual rate of 800k units means 200k units in the last three months. Is that even enough to keep up with population growth / household formation, let alone accommodate a large net inflow of people leaving cities?
GoodTimes,
I don’t think there is a mass-movement. Just small shifts. And that’s enough to make a big difference since no one is prepared for it. Prices are the first to adjust, based on demand, and supply. With higher prices comes more construction, and so it will eventually balance out.
In San Francisco, for example, you only have 250-600 transactions per month. So if you have 200 homeowners more than normal per month that want to sell their units and 200 potential buyers that are leaving per month, you have a huge imbalance… but only 400 people caused it.
So in terms of numbers of people, it doesn’t take much.
It’s happening in San Diego big time. All SFR’s are in big demand, not just the new ones.
I’m glad to see the data starting to back up what has been obvious for a few months now.
My urban apartment building (Philly) had been nearly impossible to rent. Now it’s practically vacant and the parking garage has been sparse for a couple months. The building management has gotten desperate enough to convert several units to air bnb. Good grief. Constant parties and huge unmasked crowds piling into elevators. Pot smoke in the hallways. This is a high end place. It went downhill fast.
I heard somewhere that there is a tent city in the park there now. It’s big too, like 100 tents. Unbelievable.
The problem with apartment buildings. They can go to downhill in almost a blink of an eye. A street will take much longer and is much easier to recover.
The beauty with apartments is that when it goes downhill, you can up and leave.
Wolf LITERALLY provided you with evidence. Like LITERALLY, literally, not the fake literally people use all the time.
No evidence? Besides Wolf’s data, how about simple supply and demand? United Van Lines charges $4,000 to move from L.A. to Austin TX. However to move from Austin TX to L.A? 800 bucks. No one wants to move into these horrifically run big cites.
I think it would be a mistake to assume that even if this trend turns out to be true in the medium to long term it will lead to an increase in homes prices in the burbs. People with home equity in the cities will see that burn off in the next couple of years as demand and prices drop there significantly and thus will have less (if any) to spend in the burbs, and job losses and income reductions in suburban jobs and WFH will also gut home spending power, so despite any possible increase in demand, prices will most likely go down outside of the urban areas also.
This. 32 million people unemployed.
There’s never been a lack of demand in this country. This is the United States of America, a nation of consumers. What’s lacking is buying power.
Not if VP Joe Biden gets in. His proposal is to replace the low density zoning laws that have kept the suburbs safe from urban decay.
Athough in NYC long island has become an extension of the city as if it’s a 6th boro. Plagued by many similar challenges the city faces.
High real estate taxes and a Salt cap doesnt help the situation either. $12,000 is a base for real estate taxes its more on average 18-20k and wait until the woke and broke municipalities show up with a notice – hello here is your new tax bill!
Great time to sell. Wait until $8 million homes come out of forbearance! Or how about the $32 million still unemployed? How many of these people are just in default.
Or how about this article regarding a nice suburban oasis outside NYC that we visited only to find tons of homes in April selling below the purchase price from over 10 to even 18 years ago??? ( all are now off the market btw) How is that possible.. house is not investment it’s a liability!
It felt terrific but I kept doubting its ability to remain a small town atmosphere and here comes the contenders knocking on the door telling people you think you will escape urban decay? Haha we got something else planned for you…
What an impact in general that will unfold. Think about city dwellers moving into the burbs city kids commingled with village kids. It’s going to be an Interesting transition and impact on all communities throughout the world!
“Not if VP Joe Biden gets in. His proposal is to replace the low density zoning laws that have kept the suburbs safe from urban decay.”
Obama implemented that policy shortly before he left. Trump didn’t enforce it and just this past week he officially undid it. But you’re right, Biden is fully on board with turning suburbs into cities.
It won’t work though. People want to live in homes with a yard in safe neighborhoods. Biden’s plan will just shift those people to new places further and further away from the reaches of cities.
We might even see a renaissance in rural areas if things get bad enough.
i’m pretty sure POTUS have zero ability to set local zoning laws. Jawbone, yes.
legislate, no.
Wolf,
At some point in the future, it would be great if you did a post taking a longer term retrospective of the US SFH mkt, 2000-2020.
Basically, we are talking about 20 years of some of the worst US economic performance in a long, long time…and yet DC’s ZIRP confiscations have led to significant debt-rooted housing inflation, pretty close to doubling households’ largest expense during a period of mainly negative economic dislocations.
There is a *lot* that can be talked about the topic (including reasons why supply has been slow to respond etc., comparison with previous decades’ price changes and supply increases, etc)
The eviction moratorium ends today and by the beginning of next week it will be breadlines and hoovervilles everywhere. I don’t know who these landlords think will rent from them afterwards. This is going to be epic.
If – and it’s a big if – all these evictions actually happen, it takes a long time, CA has very renter friendly laws. It could take a year or more to get someone out of a rental if the fight it in court. Add in Corona lockdowns and court backlogs and who knows could be 2 years.
Arizona extended their eviction moratorium until October.
Florida supposedly is offering rent assistance to tenants that need it. However, just like with their unemployment, the application system doesn’t work. I see a pattern here.
May be waiting for a hurricane to solve all their problems? The only state nature designed to appear like a gangplank protruding from the sides of the great ship S.S. America. Do lousy oranges float?
Not Hoovervilles. Trumptowns.
Democrap cities like Seattle, Portland, Chigaco, Baltimore, Detroit LA, SF, etc, etc, etc.
Then the riots will change focus a bit.
I’ve been saying this for a long time. Cities are toast. Burbs and small cities in flyover are hot.
Our little ma & pa business in flyover country…7 jobs in the door this week for new construction. Peanuts to the big boys, but we are into late July with no slow down for new construction. They are not moving here because of Covid. It is sad to hear the stories.
Houses and condos…how much foreign influence? The oldest recorded land deeds came with the further breakup of the Plymouth Colony and its’ common lands. Everything here belonged to the American Public for their use. In the 1980’s, the L.A. Times surveyed foreign ownership of downtown real estate (commercial) to disprove the myth of Japanese control. Brits, Canadian, etc. holding the biggest parcels. I will cast my vote only for the first candidate who commits to completely outlawing any ownership of United States land or buildings by anyone who is not a permanent resident twelve months of the year….then we might see what values should be.
If I were the government I would add a huge tax onto any foreign owner of US real estate. Let them stay if they can afford it, meanwhile they’ll be enriching our coffers. It would make for an orderly exit of foreigners from the US market too as the ‘foreign additional property tax’ is slowly ramped up year after year.
The US government is BIG on reciprocity. However it works both ways i.e. foreign governments will also add a huge tax on any US owner of foreign real estate.
Australian governments put new taxes on foreigner owners of property and vacant ownership of property……………….
Guess what happened?
They stopped buying and the revenue from the various taxes including stamp duty on their purchases dried up.
The states ended up shooting themselves in the their collective feet.
I don’t know how many different taxes there are on real estate now in Australia if you are a foreigner, but if you are a citizen or PR holder you get:
1. Rates (Oz lingo for real estate taxes)
2. Land tax if you own more than one property over a certain value
3. Stamp duty on the original purchase of a property in all states and territories except the ACT.
4. Vacant property tax if owned in certain areas and the property is vacant for a certain period of time and not a resident of Australia on a certain date.
5. Capital gains tax even on your house (PPR) if you are not a tax resident of Australia on the date you sell it (Big change for expats there which results in ALL of the capital gains subject to tax). There is no capital gains tax on your PPR in Australia.
6. Other fees (taxes) put on water bills in certain areas for “drains and waterways” or “parks”.
7. And in Victoria a ‘fire services levy’ on all properties. This was a new tax on all properties started after the big bush fires we had in Victoria in 2009.
Many people didn’t have insurance of their properties and as a result weren’t paying the ‘fire levy’ put on insurance policies in the state.
So we got a new tax which was, of course , more than old the old fire levy, even though it was applied to every property in the state. It also goes up and up every year too.
No. Not so big on reciprocity. Some countries such as Costa Rica and China do not allow foreign land ownership. But we allow it for their citizens.
Foreigners would just buy the properties through LLC’s and trusts in American States.
Absolutely. If not then we increase our homeless population each time housing prices rise and we completely demoralize the entire country.
Businesses do not survive well even without covid when most of families’ income goes towards rent and medical expenses.
The US is cannibalizing.
A home is not an investment. If one owns a home then the home’s worth is directly relevant to any home one would buy to replace it.
Sorry, buying a house or any real estate really, when 10% of homedebtors are in forbearance seem brain-dead to me or just masochism: Americans might enjoy catching falling knives after all.
A third of the workforce is on unemployment – I guess mortgage lenders have different standards nowadays.
You have to have a real pair of cajones to get a 30 year mortgage with a Depression staring you in the face.
> You have to have a real pair of cajones to get a 30 year mortgage with a Depression staring you in the face.
Imho lack of a well-functioning brain is the problem, not lack of balls.
Why, jingle mail is an option and my expectation is that inflation will be used to get out of the massive over indebtedness.
But buying in fly-over country is just stupid. Biggest problems will be there.
What if Dr Kelton of MMT fame is wrong and we can’t print even beyond “debt out the wazoo” with no problem. Maybe the dollar starts to break down and we wind up with stagflation or worse. At least you have a physical asset that you can live in and you’re paying for it with rapidly depreciating dollars.
> you’re paying for it with rapidly depreciating dollars.
You need velocity for that to happen, hence, it will not happen.
Verbatim text sent (mistakingly?) to my phone: “Hey there, this is OS Consulting looking to make a property purchase in the area. If you’re not interested, you may reply “stop” to end, but is this Forest Schoner? We’d like to make an offer on 12404 Sandridge Rd.” It is OS, not O.S. and I don’t know who they are…calling from 1-503/461-5667 which should be Oregon. The property I could find is a lot with trailer in Washington. Forest might be in Southern Oregon, not sure. So, who is OS? Are they working for foreigners? Why do they want land in this economic climate? That’s who is claiming to be buying & I hope this blows their deal. Too many sneaky sh*ts in this country.
OS = Overseas?
This is what my brother in law – a real estate broker in Montecito, Cal, wrote me:
My brother was working at Amazon and almost everyone in the Phx warehouse has contracted covid including him and now his entire family. He went to the ER when he started coughing up blood and they told him the tests aren’t accurate at all. He was diagnosed with a chest x-ray. When Amazon finds out someone has covid, they fire them and give them two weeks severance.
3rd World America, 3rd World thingy we mistakenly call healthcare.
That’s not what the Amazon commercial says. An employee in the commercial says Amazon is acting responsibly and is taking COVID-19 seriously. Her child wants to work there too, just like her Mom.
I don’t believe you (about Amazon firing covid positive employees).
> 3rd World America, 3rd World thingy we mistakenly call healthcare.
Nah. I’m from a 3rd world country that handles COVID a million times better than the USA and where workers are treated with decency.
The US is a country with massively predatory capitalism populated by people who don’t have the slightest idea of how to take proper care of their own health. A catastrophe the size of the one that’s coming was decades in the making, the US has a massive cultural problem.
Well in Victoria we had 459 new cases overnight with 10 deaths and 7 of those were in aged care. That is despite entering the third week of the our new lockdown……….
So now we join the rest of the world in failing to take care of the elderly.
I note that in Florida some 46% of deaths have been in aged care or long term care.
What in the world is wrong with systemsthe know what the problem is and can’t take measures to stop it?
“Officially”, the fake economy started in the early 1980s with long-term rates trending down while the Federal Debt continued to increase to present day. And since 2008, Economic “Growth” is only due to perpetual borrowed money which can no longer be paid back.
The question is, how long can this economic fantasy continue ?
How does any rational person watch the goings on in Seattle, Portland, Chicago, Minneapolis, etc over the past 2 months and think to themselves, yeah big city living sounds like a good idea for the foreseeable future. They obviously don’t. And hence the data we’re seeing. This is only the tip of the iceberg.
The Columbus statue was taken down in Chicago so he won’t be shooting this weekend.
In big cities you can show that you’re socially responsible by painting graffiti on other people’s property, throwing stuff at on duty law enforcement officers, breaking businesses windows and starting fires in the streets. You can’t do that sort of thing easily in a small town. No way to get recognition.
I’m sure those actions will do wonderful things for property values in those cities.
Best thing to do would be to leave.
Americans have turned into the biggest bunch of idiots in the world and the biggest bunch of idiots in the USA are in democrat controlled cities and states.
You mean the states paying for all the idiocy in Red country that cant read, wear a mask or wear one that doesnt have a Swastika on it lol :) Sorry Lee stupidity abounds and it is not confined.
Housing construction activity is increasing.
According to the Census Bureau July 17 report:
Housing Completions
“Privately-owned housing completions in June were at a seasonally adjusted annual rate of 1,225,000. This is 4.3 percent (±12.2 percent)* above the revised May estimate of 1,174,000 and is 5.1 percent (±11.9 percent)* above the June 2019 rate of 1,166,000. Single-family housing completions in June were at a rate of 910,000; this is 9.6 percent (±15.2 percent)* above the revised May rate of 830,000. The June rate for units in buildings with five units or more was 311,000.“
Sure. I personally have erected three houses and a hotel on Boardwalk and on Park Place. The money will be rolling in.
George Carlin and others were talking about this years ago. The wealthy want it all. They want to take your Grandma’s $600/month social security check. etc etc.
When I started in Telecom in 1998, I had a company car, reimbursed for gas/meals in the field, health care, 401K, decent salary. I worked extremely hard and save them millions of dollars I could document.
Today? Everybody is a contractor, no benefits, no health care, no gas/meals, no 401K, super low pay. They hold a middle finger up to your face and say “You don’t like it? We’ll get somebody else…..”
But their stocks fly. Layoffs and the stock price ramps. There is no unspoken contract between company and employee anymore. No loyalty. The protests are about a lot more than BLM It’s been simmering since 2008, prolly since the late 1990’s Yes , something wicked this way comes. It’s been a long time a coming The Jamie Dimons of the world need to start worrying about heads on pikes. But then they already have their getaways in South America or New Zealand
This. And the Dimons and their ilk won’t be the bag holders for the mess they have created, that will fall on the people who think they are part of the club fleeing to the safe (for now) suburbs. Poor people have nothing to pay with. Austin, Raleigh, Boise etc. pricing will catch up quickly. Increases in the COL come with the money as sure as the U-hauls.
It really comes down to accepting where this country is at and pulling together as citizens and creating solutions, not looking for personal escape hatches. Those are an illusion except for the very select few.
Oh wait, we all think we are the few now. Never mind.
Nah.
Capitalism.
“In the end, there can be only one.”
Modern cities serve no purpose. With the internet there is no need to live near an employer. Museums and other art are at least as accessible in the home as in the city, without the need for transportation and protection from filth and assault. Shopping is now online. We have not visited a department store in 10 years. No need to visit several stores to find the style and fit we seek.
The need for proximity to anything does not exist. Now with Covid, the last bastion of proximity being sports games and performance, have been negated, unlikely to return. Perhaps the last vestige of needing proximity is food, especially pastries. Europeans know this all to well with the croissant and brotchen. Certainly coffee as art has been made local everywhere.
The city has cramped accommodation with filth if you emerge. The suburbs offer neighborliness, cleanliness, and communing with natural surroundings. Tear down the cities, get out, then turn them into farmland.
“Perhaps the last vestige of needing proximity is food”
reproduction is still offline :(
Tube babies say you are wrong.
Some guy on the tube does videos on the worst neighborhoods theme. The rust belt cities are already becoming pastures. Detroit looked like parts of rural PA that I know well.
The big manufacturing plant I ran in the late 1970’s in Detroit near the Harbor Terminal is GONE. It’s an empty parcel of 10 acres in size. And the areas around it where Chrysler had a plant is gone too. Just parcel of dirt, weeds, and trash.
You forgot the grade-level cement slabs and acres of asphalt.
What about those of us who have no hope of ever owning a home?
What about those of us who have no interest in ever owning a home?
Exactly, I belong to both groups actually
You cannot own a home in America. You can only rent it from the Township. The rent is called property taxes.
Also, when you have a mortgage you are in essence renting from a bank or mortgage lender. “Owners” seem to conveniently forget this when they are looking down their noses at lowly renters.
And don’t forget the huge carrying costs of HOA fees for houses and condos.
NotMe,
Humans are still social animals and we want/need to be around other people. But there’s no need to be around 5M other people when 25-50K will do.
I dunno, I spent the first half of my life in a town of 30K, and it was a miserable, lonely experience. I found more people to connect with in 6 months in a city than I did in 15 years in small town Wyoming.
Did you take a shower or bath everyday?
I think of the pandemic as only the final nail in the coffin of big cities. The exodus has been going on for decades. Consider Detroit. In the early 70s the population was over 2 million. Today it’s 3/4 million – a reduction of 2/3s! City government experienced a 2/3 reduction in tax revenue. To maintain budgets the city would have had to triple peoples taxes.
Milwaukee is much the same story. There are 3 counties to the north, west and south. Milwaukee experienced a decrease in population while all 3 counties had increase.
Maybe it’s just a regional thing …
It clearly is a regional thing. Look at Dallas, Austin, Miami, Denver, Phoenix.
How this rebound can occur with 30 million unemployed? Did the banks not tighten the credit condition ?
When cheap commercial real estate is available cool things happen.
Covid will pass, and events will resume.
Surely this plague will pass and Siena will be back on top where it belongs.
If there is a shift from City Condos to houses in the burbs, who’s buying the condos in the city? Are prices dropping fast for city condos? Also, is it mostly first time buyers moving to the burbs?
Dave,
Look at the condo data for the San Francisco Bay Area that I supplied in the article. “Who” is buying? Not many are buying and sales are way down. And yes, prices are dropping fast for condos in the Bay Area.
BOGO!! coming? To steal from old ads…”Two, two, two apartMints in one”.
Pardon a relative newbie – but I’m a little confused. Let’s say the purpose of the exercise is to determine if indeed there is “an exodus from Big Cities to the Suburbs” – what is the right metric? Why would fluctuations in condo sales teach us anything?
If we’re talking sales of NEW condos – then, by definition, it should be considered an indication of Big City inflow, not outflow.
And if we’re dealing with sales of existing condos – isn’t it the case that, again by definition, for every seller moving out there’s a buyer moving in? If both buyer and seller are from Big City, then net migration is zero. If seller is from Big City but buyer is from Suburb – again, net migration is zero, right?
Think about it – if we are looking at a real exodus, we should expect to see the following three things: a significant increase in the number of listings of new or existing condos available for sale, a much longer time to market for these listings, and a significant drop in condo prices? Wouldn’t checking for fluctuations in these three metrics (and not just over the same quarter last year, but the last 3-5 years) be more informative?
I can’t find the data for these three metrics, although I have seen here somewhere that the price for (existing?) condos has actually gone up – not by much but still!
Again, not trying to push a conclusion either way – just really trying to understand what’s going on.
Look at the SF Bay Area condo data (prices and sales volume of existing condos) in the article. That’s a big urban area. Then compare it to data on houses also mentioned. This is an indication that condos are very weak. And houses are not.
“Why” is a separate question, and we can only speculate. Over the last 10 years, condos and houses have moved in tandem. Why are they diverging now? There could be different reasons, one of which is home buyers have lost interest in living in a high rise and they want something with a yard, away from so many people. This explanation of “why” is supported by quite a bit of anecdotal evidence.
This is occurring in other big cities, such as NY City, where house sales in the Hamptons and other areas have suddenly gotten red-hot, as rental apartments and condos in NYC are taking a major hit.
When you live in an apartment/condo you accumulate fewer “things” than living in a house. Things have a tendency to accumulate around a house. They provide considerable physical inertia for moving a home. Speaking from experience.
Well, I decided to check things in NYC – rental and apartment prices.
As to rental, “StreetEasy Manhattan Rent Index … [fell] year-over-year for the first time since the Great Recession, sinking 0.9%”. On the other hand, “The StreetEasy Queens Rent Index rose 1.2% to $2,196 during the second quarter.”
On the sales side, the same source reports that “Sales prices also fell, with the StreetEasy Manhattan Price Index … down 4.1%”. On the other hand, another source reports that “May closed with … a 4% gain over May 2019. Additionally, this also made May the second-most expensive month in NYC up to that point…”.
Unfortunately, I couldn’t find data on the number of apartments put up for sale as compared to that figure during the last several years.
So, at least where NYC is concerned, while there are some indications of a slowdown, it’s a far cry from a mass migration. So I don’t think it’s time for me to go short city/long suburb yet…
Sources:
https://streeteasy.com/blog/q2-2020-market-reports/
https://www.propertyshark.com/Real-Estate-Reports/2020/07/14/nyc-real-estate-covid19/
For years a lot of the luxury condos in urban areas (NYC, Miami, Vancouver, Seattle, L.A) were bought by well off but not extremely rich foreign buyers, particularly Chinese. This has reportedly slowed down. Partly because of the slow down in the world’s economy and partly because of restrictions the Chinese government put up to slow capital flight. Plus tensions between the US and China. Plus a few temporary localized pilot programs in some of those cities where foreign buyers could not buy unless they showed as owner on any LLCs AND accounted for where they got the money. Those programs scared some people off.
However, this does not mean that larger Chinese and other investors have stopped putting cash into US real estate. Think billionaires. US real estate is one big laundry basket.
There is no way to know, as I don’t think anyone can keep statistics on this, but much money may still be filtered into the US now through offshore or untraceable LLCs. For instance, there is a new investor in my area that is that is buying up SFHs with cash in suburbs. That investor seems to be a sort of franchise front for a much much larger company that is not easily traceable. How much of this is going on? Who could know? It is probably much more expensive to transfer money illegally from China now, and much harder to do. It is likely only the very rich or very well connected can still do so easily.
One thing to add is I believe the shift from condos to houses would happen without the current pandemic, it’s just accelerating a secular trend. The reason: demographics.
The median Millennial is 29 years old. The age cohort has shifted from single youthful hipster to married mom planning to have a second kid. Families need space and backyards more than they need to be within walking distance of a cool club. They’re growing out of renting the bachelor pad in the city center and wanting to own a house in the suburbs with a good school system. It’s simple age and life stages.
The demand for small condos is shifting to large houses because Millennials are now heads of households and pushing the demand that direction.
Yup. You need room for the “stuff.”
Based on a debt based ponzi??? Sure. When its gone, so is that way of life. That is the paradox of modern politics can’t absorb.
In the 92115 zip code things certainly aren’t showing any signs of slowing. This house is on a shortcut street with a into the neighborhood and runs parallel and 100 feet away from one of the busiest streets in San Diego (College Ave). Lot’s of duplexes and rentals on this street, too. https://www.redfin.com/CA/San-Diego/4747-Soria-Dr-92115/home/5473243. Active for 5 days so probably got a full price or over bid.
This zip code would have been considered the suburbs up until around the 70’s when they started massive urban sprawl in San Diego. We’re still loaded with SFR’s and many streets here have a definite rural feel. I have no idea what the condo market is doing here but suspect with the absolute lack of picket fence type housing it’s doing well.
A cursory search shows 2/2 condos in the 92115 selling at 300 plus for an area you won’t get carjacked and these look like boring apartment conversion condos.