Home ownership after the pandemic

September 22nd, 2020
This article is featured in the Acting Missionally issue of Ministry During The Pandemic

The American dream 

Throughout the 20th century, the American dream was often symbolized by the idealized notion of a white picket fence. That symbolic fence would signify that you were successful enough to afford a home of your own, a place with a yard and room to raise a family. In many ways, the white picket fence is central to our American mythos about homeownership and individualism. Owning a home has become an aspect of our identity, an aspect of our freedom, pushing us beyond merely being workers and making us landowners in control of our own destiny. As European immigrants arrived in North America, they sought independence and self-determination on the land, leaving behind European systems of tenant farming. 

The early American tradition of homesteaders heading westward to find their place in the world, looking for their own plot of land to secure their independence, is another manifestation of this concept. There are pieces of this narrative throughout our history. Oklahoma is called the “Sooner State” after a group of settlers who rushed to claim their own plot of land in the region before the official start of the Land Rush of 1889. More than 20 years earlier, in 1865, Union General William Tecumseh Sherman issued a wartime order allotting “forty acres and a mule” to some families freed from slavery in the South. That phrase still echoes more than a century later. 

The dream was to survive on the land, working for oneself and carving out one’s own future beyond the control of the landowning gentry. Of course, this dream was never entirely a reality and does not account for the terrible history of Indigenous communities forced off their ancestral lands nor the millions of enslaved people who were pushed into being tenant farmers once freed, but it has long existed as some type of idealistic North Star. 

As communities became less agrarian and more urban, the dream of landownership slowly morphed into homeownership, a symbol of financial independence, freedom and adulthood. While there has been some recent conversation about the future of homeownership as millennials struggle with stagnant wages and steep student loan debt, most researchers agree that homeownership is still enshrined as a mark of stability and achievement in American society. Owning a home still represents a sense of security, and rootedness. Yet, millennials have delayed homeownership as a benchmark for adult achievement. Research points to delays in marriage and childbearing for this shift. Additionally, millennials have 39% more student loan debt on average than the Baby Boomer generation, making it increasingly difficult to save for the standard 20% down payment. According to a recent SmartAsset report, the median home cost in most American cities was so much higher than the median salary that it would take over a decade to save for a 20% down payment. 

With all of these financial considerations taken into account, it would make sense that millennials are shying away from homeownership, but research shows that though there is a delay, many still aspire to own their own homes. 

Pandemic property purchasing 

Though the trend over the last decade has steadily bent toward renting in the city instead of purchasing in the suburbs, realtors have recently seen a sharp shift in the housing market. As fear of living in close quarters has spiked during the COVID-19 pandemic, many city-dwellers, especially those in hard-hit cities like New York, have turned their eyes to the suburbs as a possible escape. The housing market in these suburban areas has boomed, with many buyers purchasing homes sight unseen. 

“Sellers are realizing the sudden new demand — it’s like catching lightning in a bottle,” said Jaime Sneddon, a broker with William Pitt Sotheby’s International Realty. While most agree the current trend is real, opinions differ on whether this flight out of the city and into the suburbs and rural areas will continue. Some real estate brokers expect the pandemic to leave a lasting imprint on city-dwellers, making them hesitant to return to densely packed apartments in the thick of an urban jungle. Others are skeptical that even a pandemic will keep buyers out of the city for long. “When there is a vaccine, and let’s call it 2021, and this is resolved, does this thinking continue? My thinking is no,” said Jonathan Miller, the president of Miller Samuel appraisers. “Only because we saw this after 9/11. We saw this outbound migration for three years and then it reversed.” 

Whether the trend continues or not, the housing market is changing as a result of the pandemic. While buyers are willing to compromise on elements within a home — like accepting dated interiors for larger lot sizes — how homes are being sold has shifted dramatically. Virtual home tours are taking the place of in-person tours for safety reasons, and many buyers are signing all their closing documents virtually, potentially putting at risk the need for attorneys and other property management positions. 

One factor accelerating the shift out of megametropolises like San Francisco and New York City is the massive shift toward work-from-home arrangements. Google announced that it will allow employees to work from home until the summer of 2021, and Facebook has already stated it envisions fully half its workers to be remote within the next 10 years. As workers are no longer bound to city-centered offices, the move to suburban and rural locations could become permanent, changing the economic and political landscape of the country. 

It is currently a sellers market — particularly for areas surrounding major cities. With mortgage rates at all-time lows, there are clear incentives to buy instead of renting if financially possible. But this surge in real estate sales isn’t likely to last. Financier Fannie Mae predicts an overall 15% decline in home sales for 2020 due to layoffs and lost wages. As real estate agents and economists look toward 2021, the question of whether the economy will rebound enough to keep people in secure jobs — and able to afford mortgages — looms large.

Rural revival 

As the pandemic hits major cities especially hard, young urbanites are setting their sights on purchasing homes outside the city. However, while large houses and small suburban lots used to be at the center of the market, this new round of buyers are increasingly looking for larger lots and more land, leading to an increasing interest in rural areas. Realtor.com found that homes in rural zip codes have seen a 34% increase in views compared to a year ago. “I haven’t seen people looking for land in 12 to 15 years,” said Mr. Sneddon, a real estate agent in New Canaan, Connecticut. “We just thawed a market that had been frozen over for a long time.” 

Open spaces and land to expand has become more appealing as the pandemic is keeping more families at home. In Weston, Connecticut, where the market starts with two-acre lots and only goes up in size, they’ve seen a tripling of their sales from the previous year. As workers are no longer tethered to physical offices, the possibility of permanent moves to rural communities is possible. This shift could drastically change the landscape of the American workforce, reviving small towns and opening up new housing markets for millennial buyers.

Be sure to check out FaithLink, a weekly downloadable discussion guide for classes and small groups.

comments powered by Disqus