Today we have a very special episode with Senior Communications Manager, Stacey Corso, who interviews Clare Trapasso, a deputy news editor at realtor.com. Clare is a highly respected multimedia journalist with a keen insight into the real estate market. housing market
In one of her recent articles, Clare analyzed the migration from cities to suburbs due to COVID-19. We look at different trends and changes that have occurred in the real estate market since the outset of the pandemic.
00:00 - The key reason people are making the move from cities to suburbs.
05:18 - The impact of this migration on median home price growth and inventory.
08:55 - What are the up and coming secondary and tertiary markets.
13:34 - Other reasons behind the move and what kind of suburbs are doing well.
17:52 - What’s happening in the New York market and where to find Clare.
Stacey Corso 00:02
Welcome everyone to a very special edition of the Myndful Investor podcast. Steve Rozenberg has been kind enough to hand over the mic to me today to interview one of my favorite real estate market reporters, Clare Trapasso of realtor.com. Today Clare and I are going to chat about a trend that I really believe has kind of defined the real estate market in 2020: urban flight from big cities to the suburbs. But before we get to that, let's talk about Clare's background. Journalist with over a decade of experience. Clare currently serves as a deputy news editor @ realtor.com, a post she's held for nearly five years, Clare has written for the New York Daily News and other finance publications. She also has experience as a journalism professor at St. John's University and other colleges. In short, Clare is a highly respected multimedia journalist, and as I mentioned, is one of my personal favorites. Because like Clare, I have a penchant for crunching data and looking at numbers and just digging deep into the housing market. That's something we both enjoy, and something I need in my capacity as Mynd's Senior Communications Manager. Clare's work has not only been recognized by me and other folks in the field, her peers in the industry also recognized her, the National Association of real estate editors, and the millions of readers who consume her articles on realtor.com every day. And speaking of articles on realtor.com, that's what brings us to this podcast. One of Clare's recent articles inspired me to reach out to her for this interview. It's entitled Buyers Say Bye Bye to the City:, Are the Suburbs Ready for a Massive Makeover. So Clare, welcome to the Myndful Investor podcast.
Clare Trapasso 02:11
Thank you for having me.
Stacey Corso 02:13
You're quite welcome. How are you doing today?
Clare Trapasso 02:16
I'm doing well. Thank you.
Stacey Corso 02:18
Fantastic. So without further ado, I guess we'll get going on the questions. As we all know, people are moving to the suburbs, from places like San Francisco in New York City in droves. What are some of the key reasons that people are making this transition?
Clare Trapasso 02:39
Well, I'm one of those people, I was actually an inexpensive apartment in Manhattan with my partner and two dogs. And it was dreadful. It was absolutely dreadful. Because you spend all this money to live in these places. And usually, they're small apartments so that you can enjoy everything outside, you can enjoy, you know, all the bounties of living in these big cities, and then it all kind of shuts down and you're stuck in an apartment with spotty Wi Fi trying to have zoom calls, while your partner's in the same room trying to have a zoom call, and the dogs are barking. And it's not exactly the most pleasant experience. So we moved to the suburbs, we are one of those folks who did it. Um, it's a different story for a lot of people, some people you know, especially in expensive cities where you don't have a lot of space, or going well, if I'm allowed to work remotely now and I don't have to commute into the office, I could do it from anywhere. I could do it from my parents house, I could do it from you know, much less expensive house someplace else, I could do it from a country home, then you have folks who have kids, and maybe they were already thinking, Hey, you know, the city's fun, but we're going to have to get a house and get more space and we can, you know, afford that in the suburbs, and maybe they like a certain school system. So they were already kind of planning on making that move anyway. And then the pandemic was sort of that impetus to to kind of speed them along a little quicker than they might have, you know, otherwise went. And then you have folks who are maybe college students or younger people who are moving back in with their parents. Um, and then you have folks who have lost their jobs or maybe had their hours reduced or her struggling financially and are kind of, you know, moving in with family members to save on expenses.
Stacey Corso 04:23
Yeah, absolutely. I'm one of those people that moved from the Bay Area to Ohio before, just before the Coronavirus for the expensive factor because it's just getting a little too expensive plus I wanted to be by my parents as they're getting older and my whole family. So I understand for a lot of different reasons people are leaving or have left. So at mid year mark, during the height of the coronavirus pandemic data providers were reporting double digit Rent declines of between 13 and 15% in San Francisco and other Bay Area markets. How is this urban flight phenomenon impacting us median home price growth and inventory?
Clare Trapasso 05:17
Yeah, that's Oh, okay. So we were already in a housing shortage before the Coronavirus. I mean, it was it was pretty, you know, builders just haven't been able to ramp back up since the great recession of over a decade ago. You know, a lot of homes were bought up by investors, and we're not in the markets. We were already really we have all these millennials getting older who are seeking homes. We were already in a pretty bad inventory crunch before the Coronavirus. And then it hit and all of a sudden people were like, you know, maybe they live in the city and it's time to get that country house. Maybe it's that suburban family that wants to move out to the suburbs with their kids, maybe it's you know, folks who were living in big cities could suddenly go remote. And we're like, hey, let's go buy a house. So it's been kind of a mad rush. And we're now at, you know, record low inventory. And what's happened is, we have also record low mortgage interest rates, I think they're down just today, Fannie Mae was reporting 2.71% for a 30 year fixed loan, which is pretty incredible. So you combine that with record low mortgage rates and people who are still employed or going, Okay, let's get a house in demand has just really boosted prices. I mean, we just released our November numbers, and the median homeless price, according to realtor.com is 248,000. And I'm sorry, not 200. I mean, 348,000 is the November national median listing price. And that's up 12.7% compared to last year, I'll just let that sink in 12.7%.
Stacey Corso 07:05
That is incredible. When the employment market declines, so significantly, excuse me significantly, in the first two quarters, three quarters of 2020. That is, that's crazy.
Clare Trapasso 07:21
But it's become something like a haven't have nots, you have a lot of people who have kept their jobs and are doing a lot of white collar workers. Not all but many white collar workers have kept their jobs and you see people you know, on the lower income, sort of strata, you know, a lot of the service jobs, the lower paying service jobs are the folks who have been, you know, unfortunately, harder hit.
Stacey Corso 07:44
Absolutely. That's an interesting topic in and of itself for future podcasts, like, how is it impacted the have nots? Because, you know, it's clear to me with medium price growth or home listing price growth of 12.7%. That's not impacting, you know, I don't think that speaks much to that, you know, lower income earner. And those numbers really reflect what's happening in the white collar employment market. So interesting. Are you seeing any inventory? Are there any urban areas where inventory is just so extremely tight, or extremely high, maybe there are some opportunities for people to, you know, move and still get a decent deal on a home or an investor to buy some place that's off the beaten path or maybe an urban area we don't know about?
Clare Trapasso 08:55
Unfortunately, inventory is pretty tight across the board. I mean, there may be some markets that for whatever reason, are seeing a little bit of a boost, but it's really a problem nationally, when it comes to investors, you know, especially if they're looking for investment properties to rent out. They may want to consider smaller cities or sort of mid-tier cities, because well, rents are not doing as well in the San Francisco's and the New York's and some of the more expensive markets. The secondary markets are still seeing price growth. You know, Apartment List recently put out some information on where they're seeing rent growth since March. And places like Boise, Idaho are seeing 9.1% rent growth for you know, a median two-bedroom. Chesapeake, Virginia was another one they cited, as well as Greensboro, North Carolina, I'm sorry, Greensboro, North Carolina, Toledo, Ohio, Albuquerque, New Mexico. So that's kind of where the opportunities are as folks go to lower price markets. They're driving the prices up in those places.
Stacey Corso 10:02
Yeah, absolutely. And we actually did a little research, Mynd did some research earlier this year, on the markets with the tightest supply of single-family rentals. And Toledo, Ohio was near the top of the list, surprisingly, and then a bunch of Appalachian cities, Richmond, Virginia, I think was number one. And this is based on year over year occupancy growth. So Richmond was number one. And Charlotte was in there, in various Appalachian areas that were surprising to me that even made the list. But yeah, I see tertiary markets really booming. So in terms of the types of homes or residences that people are moving into from urban areas, what are they buying and renting in suburban markets? Are they you know, looking at condos? Are they looking at single-family properties?
Clare Trapasso 11:21
They want single-family homes. I mean, it's all about right now socially distancing. And a lot of people are working from home. And, you know, people feel more comfortable entertaining, or seeing people outside. So people want their own single-family house, we're seeing a return to bigger is better. For a while, you know, millennials, like nobody wanted these huge homes, and now people want them. And they want a big yard. So they can entertain. So they can sit out there and work so they can find their space they want to be, you know, they want to be in a big house with a big yard. And if it has a home office or two home offices even better. They want those home offices. And they want, they have kids that are learning remotely, they want to space for the kids. You know, people are like, I want an exercise room, because they don't feel safe going to the gym. The bigger is better, more square footage, the better right now.
Stacey Corso 12:20
More expensive. Do you also see real estate investors? Some trends there. Do you see investors jumping on the suburban bandwagon as well?
Clare Trapasso 12:36
We have history in the last couple years, we definitely have you know, you're seeing a rise of properties that are built for rentals, like single family homes built for rentals. And you have seen you know, some of the bigger the bigger funds, like scooping up these properties. In terms of mom and pops, I'm really not so sure. I mean, I think the hard part is that home prices have risen so much. It's not like you know, the last recession where you could get properties at a good price. You know, now you're competing with people who want to live in them.
Stacey Corso 13:08
Yeah, that's interesting. No, no, how we call this a recession with home prices like this. Alright, from your research. Are you seeing remote work continue to be a major contributor to this new trend? I know we discuss that a bit. Are there other reasons people are moving from urban areas to the suburbs?
Clare Trapasso 13:34
I mean, a lot of it is remote work. Because the theory is if you don't have to go to the office, you can work anywhere you have a internet connection, a good internet connection and a good phone connection. You know, and then there's the feeling that... when we have a vaccine soon. And it's safe to go back into the office, there's a feeling of you know, if I only have to go two days a week, then I don't mind making a longer commute. Yeah, you know, so suddenly, it opens up more of the excerpts and it opens up more the further out suburban areas for folks to you know, commute in, you know, an hour and a half commute each way, isn't something that most people want to do, unless you're only doing it once a week. And then all of a sudden, it's like, wow, I can get this big house with this amazing yard in this town that I've always loved, you know, and it becomes a lot more feasible. So yeah, I think remote work really is sort of driving it right now. As well as financial necessity. If you need to, you need to kind of move in with folks to pay the bills, as well as just you know, I really do believe that the Coronavirus, the COVID-19 you know, it's really accelerated people who are planning on moving to the suburbs anyway. It just sort of was like well, we were gonna do it in two or three years. We just did it now.
Stacey Corso 14:50
It just kind of pushed them into it. So given that many companies are embracing this permanent remote work. Do you think that suburban homes will continue to be highly desirable in 2021? What are your thoughts on looking to the future?
Clare Trapasso 15:15
You know, I wish I had a crystal ball and I can tell you all this kind of good stuff. Um, look, it looks like the suburbs right now are booming, especially suburbs that are walkable suburbs that are still commutable to the main cities, you know, suburbs that have amenities, the suburbs that have good restaurants, good bars are walkable and have entertainment. I mean, those are the places that people want to live. And I think those suburbs will continue to do well, even after the pandemic. But I wouldn't count cities out. I think that, you know, cities have a certain vibrancy they offer, world class theater or world class museums sporting events, I think they're going to continue to be a draw for people, especially young people going forward, once there's a vaccine.
Stacey Corso 15:59
Do you see, you know, there's been some recent reports about people taking advantage of the rent declines in places like New York or San Francisco. Are you maybe anecdotally or otherwise seeing people take advantage of these opportunities and move back into urban areas as any kind of rate?
Clare Trapasso 16:24
I haven't seen that within my own circles. But you know, I am hearing of folks who are already in the city, you know, I've had friends and family that have definitely taken advantage of some of these offers, you know, maybe they get a free month's rent, or there's rent reductions, and they can move into a place that maybe they wouldn't have been able to before before. So people are definitely still, you know, still in the cities, loving the cities, and enjoying temporary rent breaks.
Stacey Corso 16:54
And we are seeing quite a few rent concessions actually in the Bay Area. So that is, that might be something to look at in 2021 for folks that are considering moving back. So is there anything else that maybe we haven't covered in the whole urban flight discussion you want to highlight or discuss?
Clare Trapasso 17:23
I mean, I think I want to go back to the suburbs that are going to do the best. That the people really want to be in or suburbs that are urbanized suburbs that have a lot of the urban amenities. But you can also get a house like a single-family house with those two home offices and a nice backyard. And then, you know, you can walk down the street to your favorite coffeehouse and maybe walk to a movie. Those are the suburbs that people you know, especially people leaving the cities really, really want to see.
Stacey Corso 17:52
Are there any names in New York or any suburbs that come to mind offhand that are really desirable and have those urban amenities?
Clare Trapasso 18:06
I mean, I live in, I moved to Rochester and some of the river towns like you know, Dobbs Ferry, Terry town, I mean, those kind of places are popular with folks because again, you can walk to the train, it's an easy commute to New York City. You have those amenities that people are looking for. You have the downtown corridor, sort of feeling to it or Main Street. Early downtown. Main Street.
Stacey Corso 18:32
Okay. I guess that is about it for us. I guess that wraps it up. But Clare, tell us where folks can find you. I know they can find you on Twitter. It's c l a r e t r a p? And then do you have a website? Or where can they find your articles?
Clare Trapasso 19:04
They can, they can go to realtor.com. And we have a news and insight section. And you can see all of our work there. Or you can check out my website at claretrapasso.com, and you can find me on LinkedIn.
Stacey Corso 19:16
Fantastic. And you can find us online at mynd.co, the Myndful Investor on our website. You can find us on Apple podcasts, you can download us and Spotify anywhere you really stream good content, you can find us. So thank you so much for joining us today, Clare.
Clare Trapasso 19:42
Thank you so much for having me. I really appreciate it.
Stacey Corso 19:43
Yeah, absolutely. And I'm sure we'll have you back again for something else, maybe in 2021 to discuss with you. That's awesome. All right. Well, have a great day.
Clare Trapasso 19:56
Thanks. Bye bye bye.
Clare Trapasso is the senior news editor of realtor.com, writing and editing stories about the world of residential and rental real estate. She has written for the New York Daily News and other finance publications. She is also an adjunct journalism professor at St. John's University.