Reuters tries to connect the dots between data on housing construction and claims that people are leaving cities:
U.S. homebuilding increased in June by the most in nearly four years amid reports of rising demand for housing in suburbs and rural areas as companies allow employees to work from home during the COVID-19 pandemic…
A survey on Thursday showed confidence among single-family homebuilders vaulting in July to levels that prevailed before the coronavirus crisis upended the economy in March.
Builders reported increased demand for single-family homes in lower density markets, including small metro areas, rural markets and large metro suburbs. The public health crisis has shifted office work from commercial business districts to homes, a trend that economists predict could become permanent…
Home building last month was boosted by a 17.2% jump in the construction of singe-family housing units, which accounts for the largest share of the housing market, to a rate of 831,000 units. Groundbreaking activity increased in the Midwest, South and Northeast, but fell in the West.
It is widely assumed that large numbers of urban residents have left New York (and possibly) other places for suburbs and other parts of the country. If so, this could influence the housing industry. Yet, I would ask a few more questions.
First question to ask: is this activity due to people leaving cities or other factors? It would be helpful to consider other possible factors at play such as seasonal changes (more housing activity in warmer weather, more demand in warmer months) and the economy (ranging from confidence of different actors to mortgage rates to available capital to unemployment – all intertwined with COVID-19). Is the uptick in activity since roughly early March to today (when
Second question to ask: if there is evidence that things are happening simultaneously, is there more evidence to suggest they are causal patterns at play? If people are leaving cities, it does not necessarily mean they are looking for new homes. Perhaps they want to return to the city, perhaps they are living with others, perhaps they are willing to rent for a while and see what happens.
And out of my own curiosity, the reporting I have seen about people leaving cities during COVID-19 seems to primarily apply to wealthier residents. Does this mean the new construction of homes will tilt toward larger, more expensive homes? If so, this is a continuation of a bifurcated housing market where those with resources will have options while many with limited resources or opportunities will not.
There is a lot to consider here and we may not the patterns for a while yet. Even if the housing industry thinks that people are fleeing cities for good, this matters regardless of the actual data.