If you punch an anthill, it is amazing to witness how quickly they scatter to another spot to build a new home. There is no doubt about it: America has been punched by a pandemic and a tumultuous year of political strife. We are now in a market where everything apart from death and taxes has changed, and we are already showing our resilience is not unlike the ant.
It is a challenge to say where the real estate market will end up, though there are indicators to suggest that the market is strong, active and will continue its positive aggression for some time. Not only is there a lot of migration in the market, but there is one feature dominating the wish lists of America’s home buyers: the home office.
In a 2019 survey, 99% of employees responded that they would like to work from home, and the number of people who are actually doing so is skyrocketing. Before the pandemic, it was estimated that 5 million people were telecommuting for work, compared to a number predicted to achieve 42 million by the end of 2021. That is an increase of over 700%.
There is a great migration happening in the U.S. as people leave the turmoil of the city for rural pastures. Corporate leaders are having their epiphanies, and technology is speeding up to catch up.
Cybersecurity is one of the downsides of this migration as hackers shift their targets from corporate firewalls to home offices where people are more slack. Phishing attacks are on the rise as they target quarantined remote workers. But the benefits to employers outweigh the risks as they see increased productivity, improved morale, increased loyalty, higher retention rates and finally the cost savings with less need for physical space.
Telecommuting is liberating homebuyers to live in locations more desirable to their budget and lifestyle. We are seeing a migration from condensed cities where political strife and pandemic concerns make less populated rural communities and suburbs more appealing.
Home renovations are on the rise, too, as homeowners are less likely to sell, staying an average of nine years instead of six years, according to The New York Times. Home office product sales are also skyrocketing.
With this great migration, Realtors might heed the changes and start staging homes differently as they prepare to sell; think living rooms as home office spaces. With many households having both parents working from home and kids taking Zoom classes, every square foot matters.
Internet availability has recently become a mandatory new feature in Paragon, the software used by Realtors in Birmingham through MLS. This is because people want to query upload/download speeds as videoconferencing becomes standard.
The Pew Research Center suggests that one in five Americans moved due to the COVID-19 pandemic or know someone who did. In Alabama, there is anecdotal evidence impacting Alabama lakes, where people from Atlanta and other cities are looking to move for a more ideal location where they can work from home and enjoy the view.
Birmingham Realtors are noticing this trend, and nine in 10 of them interviewed said home offices were high on the list of buyers. David Mele, president of homes.com, said: “The surge in the work-from-home population has rewritten the playbook for many home buying and rental decisions, from when and where to relocate, to what people are looking for in their next residence.”
Larger homes with more rooms are also a target as working from home, learning from home and simply spending more time at home becomes a priority.
Real estate is an impressive investment because it is an asset with a low fixed payment. Federal Reserve Chairman Jerome Powell said that until 2023, target interest rates should remain between 0% and 0.25% — meaning low interest rates for mortgages are not going away anytime soon. Unemployment could hit below 5% by the end of 2021. These are all positive indicators that America has not lost its buying power after a difficult year, and people are using this to their advantage. With one-third of aspiring homebuyers seeking dedicated office space, this seismic shift is beginning to look more a trend than a fad.
Written by Marshall Malone, a third-generation Realtor currently at RealtySouth.
