It has been roughly a year since the COVID-19 pandemic began in the United States, and more people than ever are buying residential real estate in vacation housing markets, per a report from Redfin.
In a study of counties that have seen the largest uptick of homebuyers – and, subsequently, home value – the top 10 are all in either vacation destinations or relatively affordable suburbs of big cities. That’s in line with the country’s sweeping work-from-home mandates put in place last March, which allowed millions of people with the capital to buy a home realizing they could work – and live – anywhere.
Between January 2020 and January 2021, the median number of days on the market fell 50 days from the year prior in El Dorado County, California (which includes Lake Tahoe and sits near Sacramento). Home prices increased 36% year over year. Another California county, Santa Cruz, saw home prices increase 18% year over year, while the time on market for homes also fell 50 days from 2019.
What’s striking about the increase of homebuyers in Santa Cruz County is the similarity in home prices to its neighboring metro areas, San Francisco and Silicon Valley. Homes are being snatched up in Santa Cruz County, and on average they trade for roughly $1 million. Redfin reported that homes in San Francisco cost on average $1.34 million.
Space is king in this housing market, at least in the midst of a pandemic.
The current housing market is making it difficult for prospective buyers to afford a home. Housing professionals need to find ways to better meet buyer needs.
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“About half of buyers in (Lake Tahoe neighborhood) El Dorado Hills are coming from the Bay Area, and the other half are local people coming from neighboring Sacramento to upgrade their homes,” said Ellie Ruiz Hitchcock, a California Redfin real estate agent. “Tech workers moving out of Silicon Valley are seeking larger homes, more overall space and a simpler lifestyle.”
East coast suburbs are also seeing an uptick in homebuyers as people move out of the cities and into vacation towns that offer more land. Barnstable County, Mass. – which includes Cape Cod – saw the median number of days on the market fall 46 days from the year before, while home prices increased 31% year over year. Ocean County, New Jersey, and Orange County, New York, also saw giant drops (40 and 29, respectively) in median number of days on the housing market.
In addition, demand for second homes across the country has skyrocketed since last January – up to 84% year over year, according to Redfin. And in super populous cities like New York, now is a great time to buy a condominium or a co-op living space, said Ken Wile, New York Redfin real estate agent.
“The housing market in New York City will come back, but it hasn’t come back yet,” Wile said. “It’s difficult for sellers. A lot of people want to move out to the suburbs, but they don’t know what to do with their homes in the city. Some owners are taking a loss because they can’t get enough rent money to cover expenses.”
Other metro areas taking a hit are homebuyers in Arlington County, Virginia (home of a Amazon’s second headquarters), which has seen a median increase of homes on the market for 12 days since last year; The District of Columbia (only 31% of homes were hold above list price); and New York County (houses on the market for an average of 184 days).
What remains to be seen is how the continued vaccine rollout and expected economic stimulus checks impacts the larger metro areas’ housing markets. With most people receiving immunizations from COVID-19, more work places could open back up to its employees – in turn, drawing them back to the city to avoid commuting from suburbs and vacation towns.
However, money from the government could also inspire potential homebuyers to make a down payment on a larger place and actually draw even more people away from crowded metro areas.
President Joseph Biden is expected to sign the American Rescue Plan sometime this week, which will trigger $1,400 stimulus checks for millions of Americans, billions in housing aid, and resources for the continuation of the coronavirus vaccine rollout.