- Investment outlook in major cities appears promising
- Suburban home values may soon plateau
Pandemic Story of Buyers Moving to Suburbs May Be Past Tense
One of the major stories in real estate during pandemic 2020 was a “mass exodus” from cities to suburbs and rural areas. As a result, suburban/rural home prices skyrocketed.
Will that uptick in suburban/rural home prices last? Not according to a Redfin report that indicated the median sales price on urban homes increased +15.9% from February 2020 to February 2021.
Likewise, a recent report from Douglas Elliman indicated there were 130 signed contracts on top-tier home priced at $4M+ in May 2021, up from just 17 signed contracts of like-priced homes in Manhattan in May 2020.
Fitch Ratings Predicting Suburban Home Price Growth to Subside Through 2021
Brokers/agents, in addition to predictions by Fitch Rankings, are now saying that urban markets throughout the US “may” offer better opportunities for stronger ROIs. Vanessa Grout, CEO of Miami’s OKO Real Estate, said, “We’re all seeing a return to cities, and no longer the fear (of cities) as there once was. Submarkets did experience a tremendous amount of appreciation (in pandemic 2020), and there might be a decrease of such acceleration now.”
Susan Landau-Abrams, an associate broker with New York’s Warburg Realty, agrees. Landau-Abrams said, “We’ll see a leveling off as people start returning to the city, because prices have jumped so much in the suburbs and there’s only so much a market can absorb.”
Even Hamptons 30% price increases are now iffy, according to Landau-Allen. “…the question is how much more could prices really go up. People are less likely to buy now.”
Returning & International Buyers Seeing Opportunities to Buy Urban Homes at Discount Prices
Both returning and international buyers in urban markets throughout the US are seeing opportunities to buy at discount prices. According to Andy Ashwai, vice president of GFI Development Company currently operating projects in New York and Miami, referred to pent-up urban demand. Ashwai said, “You have the reintroduction of foreign buyers in cities…and you also have first-time buyers coming back to the city where they can look at something larger and more affordable than (what) they would have previously gotten.”
Long-Term Outlook for Urban Markets
Case Shiller’s March 2021 report indicated price acceleration in 20 US cities along with Miami and New York where demand for single-family homes have already increased +21% y/y, including Atlanta, Boston, Chicago, Los Angeles and San Francisco.
All agents and brokers mentioned in this piece including Michael J. Franco, a broker with New York’s Compass, agree that now is the time to buy in urban markets while prices are still discounted and ROI opportunities are high.
Thanks to MansionGlobal.
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