Summer Mover Forecast: Long Term Rentals?
More people want to move this year than in any of the 10 years prior, but will they be moving into a rental or purchase? The pandemic pent up demand for listings is greater than we’ve previously predicted.
Anecdotally every broker and agent I speak with has inventory shortages. Properties are selling in a hot second, over list price and without contingencies. They also know people that desire to move but can’t due to the former. The data is not too strong yet – only a few surveys and reports exist that echo this sentiment. None the less here’s some “good news” if you are looking for seller leads.
In a study of 1,000 adults in the US, revealed that as many as 20% of households want to move. This sample size is really small, and the outcome is questionable – but it does convey the attitude and highlights the perception of demand.
The problem for real estate and mortgage – is that many of these moves are “temporary”. (who knows for how long) and that many of them were rentals and longer term airbnb rentals.
Out of the City
NorthAmerican® Van Lines shared 2020 data that illustrates what we knew, that some of the country’s largest and most expensive housing markets saw the highest net outbound moves, including New York, Los Angeles, San Francisco and Chicago. Locations like Colorado, Florida and Texas saw increases of population moving in – and rising prices as well. However, this was a similar trend prior to the pandemic.
“The pandemic brought an acceleration of trends we were seeing in 2018 and 2019,” says Zillow senior economist Jeff Tucker. “More affordable, medium-sized metro areas across the Sun Belt saw significantly more people coming than going, especially from more expensive, larger cities farther north and on the coasts. The pandemic has catalyzed purchases by millennial first-time buyers, many of whom can now work from anywhere.”
CNBC reported some good data using linkedin location data and added in the growth ratios. Below, they ranked the top 10 markets for growth. It would be reasonable to predict that both the purchase and rental markets here will be smoking hot in 2021 as well.
1. Austin, Texas
For every one person that moved out of Austin, 1.53 people moved in.
2. Phoenix, Arizona
For every one person that moved out of Phoenix, 1.48 people moved in.
3. Nashville, Tennessee
For every one person that moved out of Nashville, 1.48 people moved in.
4. Tampa, Florida
For every one person that moved out of Tampa, 1.47 people moved in.
5. Jacksonville, Florida
For every one person that moved out of Jacksonville, 1.46 people moved in.
6. Charlotte, North Carolina
For every one person that moved out of Charlotte, 1.45 people moved in.
7. Dallas, Texas
For every one person that moved out of Dallas, 1.35 people moved in.
8. Denver, Colorado
For every one person that moved out of Denver, 1.34 people moved in.
9. Las Vegas, Nevada
For every one person that moved out of Las Vegas, 1.32 people moved in.
10. Charleston, South Carolina
For every one person that moved out of Charleston, 1.31 people moved in.
Still, 11% of people moved in 2020 and that’s up from 9.9% prior to the pandemic. The real problem is that people who want to buy… can’t. Compounding this issue is that people who want to move, still can – and they are doing so without a realtor or mortgage.
With this much demand and so little inventory we can expect further upward pressure on prices in most markets (still excluding the likes of Manhattan and San Francisco as they are far outside the norm).
This summer, mobile workforces will again be enabled to “move” where they want. Perhaps even more so than last year. Many companies have suspended air travel to July 4th and beyond for employees. Work from home orders remain in place. For those people it’s a blessing that the supply on VRBO and Airbnb is virtually and seemingly endless. So people who infact want to buy (and likely sell) are just renting. And why not? Rent went up only 1.1% y/y compared to the price for buying that went up 16% y/y. For those who think this is a bubble or are priced out – renting at this point is the solution. For those who can’t find a place, renting is the solution. For those who want to move across the country to test the waters, renting is the solution.
How will you and your company help your clients with real estate when there’s nothing to buy? Can you help grow the rental market? Is that even an option in your market?
Comment below and let us know what you think.