Don’t Count Out a Big-City Comeback, Americans Say
October 2, 2020
Seventy percent of Americans say they are optimistic that major cities will bounce back post-COVID-19, according to findings from a new survey of 1,000 adults nationwide from AceableAgent.com, an online real estate education program.
“Today, the new work-from-home culture is shifting real estate markets, with states like Florida and Texas experiencing an influx in residents,” says Laura Adams, analyst at AceableAgent.com. “While we are optimistic that New York City and other major metropolitan areas will ultimately recover, there will undoubtedly be pandemic aftereffects impacting both cities and suburbs for years to come.”
New York was hit hard by the pandemic, with nearly 20,000 deaths from March to May 2020. New Yorkers are reportedly leaving the city for the suburbs and rural communities.
Nationwide, 37% of Americans said the pandemic has caused them to consider moving. Seventy-seven percent of respondents said that for 2021, they prefer to live in a suburb over a city. But that doesn’t mean they’ll always shun the city. Respondents said they’re putting less emphasis on “proximity to work” and are instead desiring “more living space,” which tends to be more plentiful in the suburbs. Many survey respondents said they're looking for more square footage, larger outdoor areas, lower population density, and increased affordability, according to the AceableAgent.com study.
But once the pandemic has subsided, housing analysts believe people will want to live in city centers again for the proximity to fine dining, luxury shopping, and nightlife just blocks away. “Real estate experts are optimistic that the economic fallout of the pandemic will not have a severe negative impact on the housing market,” the report notes.
Barclays Capital recently called the death of the city “a myth.” “Despite widely reported speculation about a collapse in demand for urban living—likely spurred by the outsize attention given to New York City and San Francisco—our data suggests that people left urban areas, but at a more modest pace than media reports might suggest,” Ryan Preclaw, a lead author in equity research at Barclays in New York, wrote in a recent report released Sept. 29.
Cities may be underperforming in their housing markets compared to the suburbs in recent months—which is in contrast to recent years, when urban areas outpaced suburbs in home price gains. But Preclaw notes that real estate prices are likely to rise across the board. However, “urban areas are at risk of losing their long stretch of outperformance,” he says.
Some residents who left big cities in the pandemic may not come back, but Preclaw predicts most will. Nevertheless, Barclays estimates that any fleeing of urban areas could bump up housing demand: Up to 500,000 new housing units could be needed even if just up to 2% people permanently relocate from urban areas, the report says.
“2020 COVID-19 and Residential Real Estate Impact Report,” Aceableagent.com (2020) and “2020 Has Been a Terrible Year for Big City Life. Will Urban Real Estate Recover?” Forbes.com (Sept. 30, 2020)
Updated: September 24, 2021