This is the third part in a multistory series on the spring housing market and what history might tell us about the present. Read part 1 here and part 2 here. Also be sure to join us in person from Aug. 8-10 for Inman Connect Las Vegas, where we’ll discuss how the spring played out.
When the coronavirus pandemic reached the U.S. in 2020, Tiffany McQuaid’s market shifted quickly.
“That was our top thing because all of a sudden people could just work from everywhere,” McQuaid recently told Inman. “Everybody was coming down, and that was the core reason why. Because all of a sudden, they could work from anywhere.”
McQuaid runs McQuaid & Company in Naples, Florida. The firm has an office in a colorful building just steps from the waterfront. Palm trees, umbrellas, a Bernini-style fountain and an open-air bar round out the neighborhood. It is, in other words, exactly the kind of place where you might want to while away the pandemic years, or simply the colder months when the rest of the country is shoveling itself out of the snow.
But this year, things are a bit different.
“I’m not noticing it, nor am I hearing about it like we did after the pandemic,” McQuaid said of remote work. “If it’s happening, people aren’t really talking about it.”
McQuaid, like many agents right now, remains busy.
But her anecdotal observations speak to something deeper. Through the pandemic, moving patterns in the U.S. became a dramatic story. Everyone, it seemed, was picking up and heading out for greener pastures. But now that the impacts and restrictions of the health crises have abated, there’s an open question as to what happens in the housing market.
Will people still move out of pricey coastal areas? Will migration be a driving force in the housing market? And what does all of this mean for this spring, which will be the least COVID-impacted second quarter since the pandemic began?
To understand what’s happening and to conclude the “Past is Prologue” series on the spring market, Inman reached out to experts and agents. But we also looked at historical data on migration patterns to see what was going on when the housing market wasn’t subject to a global health emergency.
The takeaway from this data is that over time, the U.S. housing market has been dominated by a trend of less moving generally, more longer-distance relocations and migration out of pricey areas. And now, the spring of 2023 is poised to function as a kind of transitionary period in which the influence of the pandemic winds down and some amount of normalcy sets in. Which is to say migration isn’t poised to fizzle out this year, but it may end up looking more like the distant past.
The Great Reshuffling runs out of steam
The housing trend that dominated the pandemic years has been referred to as the “Great Reshuffling.” The name, which was first widely used by Zillow CEO Rich Barton, alludes to the idea that upheaval from COVID-19 enabled types of migration that wouldn’t have previously been possible.
Data shows that this trend began early in the pandemic and continued all the way through at least last year. In fact, Realtor.com’s search data shows that during each of the last three years, views of out-of-metro homes on the platform increased. In 2020, a majority of Realtor.com views in most regions were not of homes in different parts of the country.
But by the end of 2022, more than 50 percent of views from every region in the U.S. were focused on out-of-metro properties.
Additional data from the U.S. Census Bureau and moving company U-Haul further confirms that migration remained a major theme in real estate through last year.
However, more recent findings confirm McQuaid’s observations that pandemic-era migration patterns are waning.
Earlier this month, Redfin reported that “pandemic migration hotspots are cooling more rapidly than other parts of the U.S.” The report specifically identified Austin, Texas, as the fastest-cooling market in the country. That’s significant because during the pandemic the city consistently made headlines for attracting transplants from pricey coastal cities.
The report ultimately found that tech hubs and “pandemic boomtowns” were generally cooling, while cities in the Northeast and Midwest — two areas that languish somewhat by comparison during the pandemic — were on the rise.
Hannah Jones, an economic research analyst for Realtor.com, confirmed that such markets are getting the most attention right now, telling Inman that the Manchester-Nashua metro area in New Hampshire “has been our hottest market” lately.
She pointed out that the metro area sits within commuting distance of Boston, and that many such cities that lie just outside of bigger metros are currently attracting more attention than the pandemic hotspots.
“We’re seeing some of these markets that are just slightly further from the big economic hubs, those are becoming really really popular as more companies move to hybrid work,” she said.
Jones’ comments and the reports on cooling hotspots hint at the waning, and possible end, of the Great Reshuffling trend — which is a major difference between this spring and those of the last several years.
The return of longer-term trends
So if the Great Reshuffling is ending, what will happen this spring?
One possibility is that the market gradually returns to longer-standing norms. The Brookings Institute has noted that such norms include a gradual shift of the population to the Sunbelt, for example, while U.S. Census data also shows that — recent hot housing markets notwithstanding — for decades Americans have been moving less and less.
Indeed by 2021, the “mover rate” in the U.S. — or percent of the population that relocates — was half what it was in 1948. Significantly, the census also shows that the “COVID-19 pandemic did not stop a decline” in the amount Americans move.
On the other hand, Brookings has pointed out that much of the decline in moving has taken place at the local level and that moves across county and state lines have actually ticked up lately.
The rise in longer-distance moves is part of an older trend that transcends the pandemic. In 2010, about 6.7 million Americans moved to a new state, according to census data. But in 2019, before the pandemic began, that number had ticked up to about 7.4 million.
The trend toward longer moves got a lot of attention during the pandemic and indeed it did accelerate when the health crisis began. But it was also a much deeper and prolonged shift — and one that’s likely to continue even now that COVID-19 is less of a force in public life.
State-level data also shows trends that predate the pandemic. Among those trends, California’s Legislative Analyst’s Office has found that the Golden State has actually been losing population for decades. Between 2007 and 2016, for example, 5 million people moved into California but 6 million moved out — for a net loss of 1 million.
The trend picked up steam and attention during the pandemic. But that was really just an exacerbation of something that had been happening for a long time.
On the other hand, the Federal Reserve Bank of Dallas has noted that Texas has had a net inflow of migrants for most of its history, including over the last several decades. And Rice University specifically tracks the flow of Californians to Texas. Tens of thousands of such moves have happened every year since 2005, the university found, and there was even a surge right before the pandemic.
The impact of these trends has been mitigated by factors such as a growing population, as well as historically low housing inventory that makes competition among consumers more fierce.
But as the influence of the pandemic wanes, it’s possible some of these longer-term trends may become more impactful. And indeed, there does seem to be some evidence that is happening; Redfin’s report on cooling markets, after all, includes numerous California cities, suggesting the Golden State’s penchant for losing residents continues regardless of what’s happening with COVID-19.
However, Brookings also argued that 2023 could be a “transition” year for moves with more net migration ultimately taking place.
“As the pandemic subsides,” Brookings recently argued, “and legal, normative, and informal barriers to in-person interaction continue to be lifted, not only will newly formed households begin to add to national migration rates, but established households may also be more inclined to move.”
What all of this means is that the market is changing, though it’s not entirely clear yet what role migration might play this spring.
There’s still uncertainty about the future of work
Of course one of the biggest things that made the pandemic unique was that it altered the way many office workers showed up for the job. Remote work became the norm for millions of Americans.
But it’s still not totally clear where the new norm for work will settle. Matthew Gardner, chief economist for Windermere Real Estate, pointed out that a number of big companies such as Disney, Starbucks and Amazon have all recently announced that workers must return to the office for at least part of each week. As other companies clarify their policies and workers have a sense of their long-term situation, more people might ultimately be willing to take the plunge and put down roots.
“Once these large corporations really congeal their decisions, that could actually drive some more demand for housing,” Gardner told Inman.
Jones also told Inman that activity is most intense right now in “commuter markets,” suggesting workers are beginning to settle into a new normal in which they have to visit the office some of the time but perhaps with less frequency than they did pre-pandemic.
“I think it’ll really depend on what the future of work looks like,” Jones added, adopting a wait-and-see perspective that Gardner also shared.
In other words, it may be too early to say exactly how much pandemic trends have receded and whether 2023 will look more like 2020, 2019 or some earlier date.
Agents, however, are watching a transitioning market play out in real time. Dave Jones owns and operates Windermere Abode in Tacoma, Washington, with his wife Anne Jones. Tacoma is located within commuting distance of bigger Seattle, and Dave Jones told Inman that remote work is still a factor in his market, albeit a smaller one than it was in previous years.
However, even as remote work’s influence ebbs, Dave Jones said consumers in his area are still gravitating toward properties that have features such as home offices.
“I don’t think we can walk that all the way back,” he replied when asked if remote work will disappear as a significant force in the Tacoma area.
Courtney Poulos is seeing something similar.
The owner of Acme Real Estate in Los Angeles told Inman that consumers in her market remain interested in converting garages and accessory dwelling units to workspaces. Poulos also described an ongoing “exodus” from California — a comment that echoes the data on the Golden State — and added that some of her clients who moved to smaller communities during the pandemic are now returning to the big city.
Unlike McQuaid, though, Poulos said remote work remains a major force in her market, particularly among workers in Hollywood.
The comments speak to the idea that the spring of 2023 may, to paraphrase Brookings, ultimately be a “transitionary” period in which the market is searching for a balance between the heady COVID days and the old norms that defined real estate for a decade or more before the pandemic. It’s not a fizzling of migration as an influence on housing, but a shift to a different reality.
But either way, Poulos at least was upbeat about the coming months.
“I really do feel like it’s still a great market,” she concluded. “I’m seeing houses that are incredible and well priced and would make great homes. Buyers should jump on the ones that speak to them.”