It has been rumored since the first
wave of the coronavirus struck in some of the densely populated urban centers,
especially in New York and New Jersey. Now, however, there is substantiation of
a population shift from the National Association of Home Builders (NAHB). Its
second quarter Home Building Geography Index (HBGI) shows that, while the
pandemic caused widespread economic impacts for many businesses, housing has
weathered the economic storm, rebounding quickly from an April slump. It also
shows that, the only region posting a quarterly gain for single-family
construction during the second quarter was small metro suburbs.

Litic Murali, writing in NAHB’s Eye
on Housing blog says that more than 55 percent of the U.S. population resides
in “large metro areas” but these large areas make up only 8.2 percent of all
land in HBGI’s surveyed areas (all of the U.S. excluding the territories.)
Given the risks in the current pandemic are exacerbated by a lack of social and
physical distancing, single-family homebuyers are seeking less densely
populated areas, i.e., suburbs, for housing. This began to play out in the second
quarter with relative growth in lower density markets that represent half of
all single-family construction on a four-quarter moving-average year-over-year
basis. Those small suburbs saw 2nd quarter single-family
construction rise 10.6 percent on a four-quarter moving average basis.

 

 

NAHB defines small metro suburbs as
“outlying counties” of metro areas of less than 1 million in population.
Their
population growth was followed by small towns with an increase of 9.3 percent,
small metro core areas, up 7.5 percent, and exurbs (5.6 percent). Small metro
suburbs include counties such as Green County, a suburb of Dayton, Ohio.

As a class, small metro suburbs
experienced a staggering increase of 2.3 percent for single-family home building
during the second quarter relative to a year prior. This was the only
geographic region that experienced a year-over-year increase, with other
regional declines correlated with population density.
For example, the largest
decline was in large metro core areas which declined almost 18 percent compared
to the second quarter of 2019.

The survey also found that the
market share for single-family construction in low density areas (small metro
core and suburbs, small towns, and rural markets) increased from 47.5 percent in
the second quarter of 2019 to 48.4 percent. Murali says that, while the annual gain
appears small, the changes in market share are usually slow to develop, thus
making a one-percentage point year-over-year gain noteworthy, when compared to
recent historical data.

 

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The relative change in Q2 2020 of lower-density areas’ collective market share
from the previous year (as expressed in standard deviation terms) has been the
greatest of all quarters surveyed in the HBGI and clearly accelerated as a
result of the public health crisis and recession of 2020.

The pandemic has been an influence on
the growth of low-density markets beyond the related health concerns. With a
growing share of the labor force working full or part-time at home, more
households are free to seek housing outside of large metro cores and may need
additional but affordable space to accommodate their changing lifestyle. But
there are also existing housing constraints in urban areas such of lack of
buildable land that make less dense areas more affordable.

By Jann Swanson , dated 2020-09-01 12:10:37

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Courtesy of Mortgage News Daily

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