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Demand for homes surges in suburbs and rural areas, but will buyers regret leaving urban areas?

Demand for homes surge in suburbs and rural areas, but will buyers regret leaving urban areas?
Posted at 7:11 PM, Aug 17, 2020
and last updated 2020-08-18 12:33:14-04

Despite more out-of-work Americans amid the pandemic, housing has gotten more expensive during the coronavirus pandemic, especially in rural America.

According to findings by Redfin, during the four-week period ending August 2, prices for homes in rural areas jumped 11.3% from 2019 figures. The median house price in urban areas increased by 6.7%. Suburban areas jumped 9.2%.

Redfin’s data also indicates more home buyers are looking to move to rural or suburban areas, shying from urban locales. Before the pandemic, 37% of home buyers were searching for homes in urban areas; now it’s 19%. Forty-three percent of home buyers were searching in suburban areas before the pandemic; now, it’s 50%. Nine percent of home buyers were home searching in rural areas before the pandemic; now it’s 19%.

During the coronavirus, living close to restaurants, bars, social events and offices is not nearly as much of a priority for many home buyers.

"We've been speculating about increasing interest in the suburbs and rural areas since the start of the pandemic," said Redfin economist Taylor Marr. "Now we're seeing concrete evidence that rural and suburban neighborhoods are more attractive to homebuyers than the city, partly because working from 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."

However, when the coronavirus ends and it becomes safe to return to offices and social events, will buyers regret purchasing a home in far-flung locales?

"Newly remote workers from New York City are buying properties in rural areas like Warren County, NJ and Sussex County, NJ, but I expect that some of these buyers may eventually catch post-COVID buyer's remorse," said Darlene Schror, a Redfin agent in northern New Jersey. "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."

The median price for homes in urban areas are more affordable than suburban and rural regions, but the homes being purchased in non-urban areas are generally larger.

The median home price for an urban house in the four weeks ending August 2 was $275,873, according to Redfin. Meanwhile, the median cost for a rural home was $286,750, and the median cost for a suburban home was $322,900.

But per square footage, urban homes still were more expensive, costing $176.17 per square foot, compared to $158.76 in the suburbs and $142.58 in the country.