Increased demand for rural homes continued during the month of July. During the four week period ending August 2, the median sale price for rural homes rose 11.3 percent year over year, according to a report from Redfin.
Suburban and urban areas also saw home price growth during this period, although not quite to the extent of rural areas: The median sale price rose 9.2 percent for suburban areas and 6.7 percent for urban areas. Rural areas have outpaced home price growth in the suburbs and urban locales since April.
“We’ve been speculating about increasing interest in the suburbs and rural areas since the start of the pandemic,” said Taylor Marr, an economist for Redfin. “Now we’re seeing concrete evidence that rural and suburban neighborhoods are more attractive to homebuyers than the city, partly because working form home means commute times are no longer a major factor for some people.
“And due to historically low mortgage rates, interest is turning into action. There will always be buyers who choose the city because their jobs don’t allow for remote work or they place a premium on cultural amenities like restaurants and bars — which will eventually come back — but right now the pendulum is swinging toward farther-flung places,” he added.
Over the course of the pandemic, some buyers have shifted toward looking for homes in more rural and suburban areas rather than urban ones, and home sales have remained steadier in rural areas than elsewhere.
Results from a Redfin survey of over 1,000 people found that 13 percent of homebuyers have changed their home search to a different area than originally planned. Out of those respondents who have switched where they plan to buy a home, most were previously searching for a home in an urban area and have shifted their home search to a suburban area.
During a time of staying at home and working remotely, more homebuyers apparently see the appeal of a more spacious rural or suburban lifestyle. Redfin noted that the typical home that went under contract during July in a rural or suburban area was over 1,800 square feet, compared to the typical urban home that went under contract during this time of about 1,500 square feet.
Home sales in rural areas only declined 0.9 percent during the four weeks ending August 2. However, homes in suburban neighborhoods and homes in urban areas experienced a 4.7 percent and 8.9 percent decline in sales, respectively. Pending sales during this period painted a more positive picture, however, with pendings in rural areas up 6.3 percent year over year, those in suburban areas up 9.1 percent year over year, and those in urban areas up 5.6 percent year over year.
Supply reflected demand with inventory down 37.9 percent on an annual basis in rural areas, down 31.8 percent in suburban areas and down 21.3 percent in urban areas. While new listings fell 14.2 percent year over year in rural areas and 3.6 percent in suburban areas, they rose by 0.5 percent in urban areas, potentially reflecting discontent among urban homeowners.
Some agents who have seen buyers flee to less-populous areas suspect that they may come to regret their decision once the coronavirus is under control, however.
“Newly remote workers from New York City are buying properties in rural areas like Warren County, New Jersey, and Sussex County, New Jersey, but I expect that some of these buyers may eventually catch post-COVID buyer’s remorse,” Darlene Schror, a northern New Jersey-based Redfin agent, said in the report. “Post-pandemic, buyers may realize that while their new neighborhoods make for a nice weekend getaway, the long commute may become unsustainable should things go back to normal. And they’ll miss city amenities like high-quality restaurants, shopping centers and walkability.”
Likewise, Schror noted that those same buyers may face a predicament if the market swings back in favor of urban areas later on down the line.
“Rural home values are going up now because of the pandemic, but if people lose their jobs or decide they’d rather live closer to the city, these buyers may be sitting in homes for which they’ve overpaid a time when they need to re-sell,” Schror said.