New interest from city dwellers raising home prices in rural areas
The pandemic is pushing homeowners out of the big cities and into rural and suburban areas, pushing up home prices in previously sleepy towns.
In July, less densely populated areas showed more buyer interest than urban areas, Redfin said. Before the pandemic, 9% of homebuyers said they were searching for a home in rural areas. Now, 19% say they are looking at rural options.
The median sale price of homes in rural areas increased 11.3% year over year in the four weeks ending Aug. 2, and rose 9.2% in suburban areas, while homes in urban areas had a smaller home price increase at 6.7%.
“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.”
As a result of COVID-19, 13% of homebuyers had searched for homes in a different area than originally planned, according to a Redfin survey conducted from July 19 through 21.
Before the pandemic, 37% of homebuyers said they were looking for a home in an urban area, compared to 19% now. The number of homebuyers looking in the suburbs grew – 43% said they were looking for a home in the suburbs before the pandemic and 50% said they are looking in the suburbs now.
Home supply in rural areas went down 37.9% year over year, and down 31.8% in the suburbs in the four weeks ending Aug. 2, Redfin said, compared to a 21.3% decline in urban areas.
Meanwhile, new listings in rural areas fell 14.2% year over year, and dropped 3.6% in suburban neighborhoods. In urban areas, new listings remained flat year over year.
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