COVID-19 has been a huge event in the economy and will have longterm effects on residential real estate going into 2021 at the very least, and likely far beyond. At the National Association of Realtors’ second annual Real Estate Forecast Summit last week, a group of top economists and residential real estate experts released a report regarding the strongest residential markets going into the next year. The research and insight gives some indications of where the market is headed in 2021 and what factors are helping certain markets stand out from the crowd.
The report listed 10 metro areas as the most resilient markets throughout the pandemic. They are as follows:
- Atlanta-Sandy Springs-Alpharetta, GA
- Boise City, ID
- Charleston-North Charleston, SC
- Dallas-Fort Worth-Arlington, TX
- Des Moines-West Des Moines, IA
- Indianapolis-Carmel-Anderson, IN
- Madison, WI
- Phoenix-Mesa-Chandler, AZ
- Provo-Orem, UT
- Spokane-Spokane Valley, WA
The strongest markets identified in the report were focused regionally in the South, West, and Midwest. The Coasts and the Northeast were completely unrepresented, with the one exception of Spokane. Indeed, one factor common to many of these metro areas is that they have experienced an influx of people from states like California and New York. This is especially true of Dallas-Fort Worth and Phoenix, each of which have attracted 20,000 and 29,000 residents respectively away from coastal metros.
Movers from West Coast cities was only one factor considered by the NAR report. They also looked at the percentage of people working from home, the unemployment rate, the percentage of multigenerational homes, and the strength of the small business and the retail and leisure industries in the regions. The accessibility of shopping and recreation was also a major factors.
The key takeaway isn’t so much which particular metros or states that are weathering COVID-19, but what factors are going into the endurance of particular markets. Low unemployment is probably one of the biggest contributors to a strong real estate market, but some of the less obvious statistics the NAR looked into give some insight into where real estate is headed in the coming years.
For instance, the top 10 residential markets all had a high percentage of multigenerational homes, something that has become an increased priority all across the country, as families become more wary of traditional longterm care facilities. Phoenix and Dallas again stand out here, with 4.5% and 4.6% of homes respectively being adapted for multi-generational living in those areas.
A region that has a high percentage of the labor force working remotely is also an indicator of a strong market. The number of people working from home was at 23% in September, according to the NAR data. This is down from a pandemic high of 35% in May, but still well above the 6% reported in 2019. This shift in the labor market is freeing up workers in the tech industry to move away from the coasts, while still keeping their jobs.