Aaron is the Founder of Epoch Chicago, a real estate group within Compass specializing in luxury homes.
The effects of the pandemic have been felt for the past year and a half around the world — in every country and every industry. The real estate market was no exception.
First, people were confined to their homes during stay-at-home orders, then there was an “urban exodus” as people moved from the cities and now, as the dust settles, homeowners are once again heading back to urban spaces. All the while, the real estate industry has navigated this roller coaster of a climate.
Taking A Look At The Pandemic’s Impact On Real Estate
After being confined to small apartments, a number of urban dwellers moved out of cities and opted to live in smaller cities and suburbs where real estate is more affordable and comes with more space, both inside and out. Many considered this an “urban exodus” throughout the pandemic, though Bloomberg recently labeled this trend an “urban shuffle.” The outlet reported, “Data shows most people who did move stayed close to where they came from — although Sun Belt regions that were popular even before the pandemic did see gains.”
I believe there could be a few reasons for this trend. Once the pandemic began, the restaurants, gatherings and cultural spots that had once attracted people to live in large cities like New York, Chicago and Los Angeles were no longer able to function normally. As a result, some cities struggled to maintain the vibrant social and cultural scenes they once embodied prior to Covid-19. And as many began to work remotely and children attended school virtually as well, whole families were spending all their time at home, so the prospect of more space was desirable to many. This shifted much of the geography of our nation and created “Zoom towns,” according to the Wall Street Journal.
This shift out of the cities resulted in lessened demand for condos and apartments and, in turn, reduced pricing. Cities with notoriously high rents such as New York City and San Francisco saw a fall in rates. Meanwhile, the market for suburban homes surged, which led to low inventory nationwide and a spike in home prices, according to the New York Times.
Now there is a reverse migration, as people are beginning to return to the cities. Prices for single-family homes in urban areas are rising, and sales of urban condos are up nearly 30%, the Washington Post reported. And with the housing market skyrocketing in rural areas, many homeowners have been able to sell their houses at a profit, thus allowing them to make a move to an urban area that was previously unaffordable. From my perspective, perhaps part of the reasoning for this could also be attributed to the fact that some employers have issued a call back to their employees to return to work in the office, so the amount of space some needed is now less than during the previous months.
What This Means For Leaders
The real estate market has seen many twists and turns during the pandemic and is sure to see more as the dust settles and Americans continue to adapt — whether that be in the suburbs or cities.
As such, staying on top of the market, communicating with clients and being adaptable are essential to remaining successful in these tumultuous times. It’s important to get business in any way you can, which might mean taking on additional markets or responsibilities. (That’s why I work in LA as well as Chicago.) After all, I don’t believe we have the luxury of working within niche markets anymore. If, for example, you have a client who is looking to buy a home but doesn’t find anything, they will likely end up renting again, so you will want to stay on top of that and get a rental deal. This is why it’s important to communicate almost daily with clients to see what they’re thinking and what changes might have happened that will affect their real estate transactions.