The COVID-19 pandemic caused a significant shift in demographics, with many urban dwellers leaving the city for smaller towns. Remote work opportunities, a desire for more space, and a longing for a slower lifestyle fueled the urban to rural migration. However, with the pandemic easing, readily available vaccines, and employers requiring workers to return to the office, this trend has now started to reverse. In this blog, we discover how the pandemic and work life has impacted homebuying and migration patterns.
Table of Contents
- Covid and the Shift to Rural Living
- Affordable Housing Shortages in Rural Towns
- The Return to the Office
- Advantages of City Living
- Post Pandemic and the Reversal of Migration
- Population Growth in Major Metropolitan Areas
- Conclusion
1. Covid and the Shift to Rural Living
The COVID-19 pandemic drove a shift towards rural living as people craved larger spaces during lockdowns. With offices shut, long commutes no longer applied. This resulted in a 15% increase in permanent relocations in March 2020, compared to the previous year, as reported by U.S. Postal Service data. The data, although it may not capture all moves, reflects broader trends. During the first month of the pandemic, there was a significant number of people leaving large cities such as Brooklyn, Chicago, and Los Angeles, and moving to smaller suburbs. Houston saw a 62% increase in moves out of the city, with Katy, a western suburb, becoming the most popular destination. Rural and suburban areas, like Katy, offered more space and greenery, attracting individuals, families, and businesses. According to Nadia Evangelou, a senior economist for the National Association of Realtors, Sun Belt areas with new housing developments saw some of the highest rates of people moving in.
2. Affordable Housing Shortages in Rural Towns
However, the migration to rural areas has not been without challenges. Some rural areas are struggling to accommodate the influx of new residents, leading to a shortage of affordable housing and an increase in home prices. This is especially true in popular tourist destinations that have seen an increase in both permanent residents and second-home buyers.
These towns, now faced with a housing crisis, are struggling to find solutions to accommodate the influx of new residents while still supporting the low-wage workers that are essential to the tourism industry. The shortage of affordable housing has created a vicious cycle. Workers are forced to live further away from their jobs, paying a significant portion of their income on transportation costs.
Additionally, the migration has also put pressure on rural infrastructure and services, such as healthcare and transportation. Rural areas often lack the resources and infrastructure to accommodate a sudden influx of residents. This has been a concern for many communities.
While this migration has brought new opportunities and growth to rural areas, it has also posed challenges such as a shortage of affordable housing and pressure on infrastructure and services. The rural housing market faces a decline in prices due to the limited supply of housing and the unwillingness of homeowners with low mortgage interest rates to sell. The imbalance between the demand and supply of housing is expected to persist, presenting challenges for the rural housing market in the near term.
3. The Return to the Office
As the pandemic eases, vaccines are distributed and the need for in-person collaboration increases, employers are eager to bring their employees back to the office. The shift in migration patterns comes from employers demanding their workers return to the workplace. Proximity to city centers is more crucial than ever. According to data by Kastle Systems, over half of workers in major metropolitan areas have come back to the office at least part-time. People are returning to the office for face-to-face interaction, the desire for collaboration, and a sense of normalcy
4. Advantages of City Living
In addition to the need to return to the office, cities offer a wide range of amenities and services that are not available in rural areas. These include access to shopping, dining, entertainment, and cultural attractions. Cities also provide a more diverse job market, which is a significant factor for many people when choosing where to live.
The pandemic expedited the trend of urban to rural migration. With the easing of restrictions, the advantages of city living have once again become apparent. Furthermore, the return to office work has made the city more accessible with public transportation systems and other services now fully operational.
5. Post Pandemic and the Reversal of Migration
Residents moving from cities to suburbs have decreased among those making permanent moves and cities are experiencing growth once again. According to data tracked by UBS, urban population growth has remained consistent across all metropolitan areas. This development is seen as a positive sign for cities that have faced declining occupancy over the past few years. However, economists have noted that it may take time for urban areas to regain their pre-crisis density levels. This depends on when employers bring employees back to the office and the willingness of those who left the cities to return.
6. Population Growth in Major Metropolitan Areas
New York
As more home buyers look for properties closer to large metropolitan areas, major cities are seeing a rise in population. New York City may be the first major city to fully recover its occupancy. This rebound can be attributed to the strict return-to-office policies of financial firms and major banks in NY. This has driven a demand for apartments and put New York City ahead in regaining its residents.
California
California cities exhibit a similar trend to New York City but are not as far along in their recovery. The discrepancy in the recovery rate between New York and California cities could be due to their differing return-to-office policies. Financial institutions in New York mandated in-person work early in the summer. Tech companies in Silicon Valley have postponed their return-to-office plans as virus cases surge. As a result, occupancy in New York City grew while population growth in San Francisco remained negative in Silicon Valley during the same period.
7. Conclusion
The COVID-19 pandemic caused a significant shift in demographics, leading to an urban to rural migration. With the pandemic easing and more employers requiring workers to return to the office, there are signs of a reversal. However, this change in migration patterns is not expected to be a complete reversal. Many workers who have grown accustomed to remote work will continue to work from home or seek a hybrid solution. While the impact of the pandemic on housing shortages and affordability in rural areas will likely linger, the city-to-country migration may have been a temporary trend, driven by the unique circumstances of the pandemic. Nevertheless, the return of workers to the office is helping to revive city life, making cities an attractive destination for homebuyers once again.
