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A flood of new buyers moved to the outer suburbs during the pandemic. The exurbs became a new hot spot for home buyers who fled big cities in search of larger homes and greater affordability.
Exurbs saw the highest price growth over the past year, according to realtor.com®. But once workers return to their offices, will the exurbs remain desirable?
“The jury is still out,” says Danielle Hale, realtor.com®’s chief economist. “It’s possible that some areas that saw prices rise because they were particularly attractive during the pandemic might not be able to sustain those high prices. … The factors that drew people to those areas, like having a lot of space and being far away from everything else, may change.”
Big cities are reporting higher numbers of people returning or moving there since vaccines became available and entertainment and restaurants reopened.
However, a shortage of homes for sale remains problematic for the housing industry. That shortage in first-ring suburbs and cities is still persuading many aspiring home buyers to search further out for affordability and inventory. The offerings of larger homes and backyards in the exurbs continue to be alluring. Overall, housing experts are not predicting a drop in exurb home prices yet.
“The desire for affordability, which is only going to become more important as interest rates go up, is going to keep interest in the suburbs and outer suburbs high,” Hale says. “They have always been the escape valve for high city prices. It’s not a new phenomenon that, when people can’t afford the city, they look further out.”
Also, exurbs offer an opportunity for homebuilders, who’ve been searching for more land to build. “Exurbs have great potential for development,” Hale says. “They have more open space for builders to build and create things, which is a bit harder to come by the closer in you get to the city.”