Buyer Interest In Suburban Areas Growing
One of the outgrowths of the pandemic is an increase interest of home buyers in suburban settings. This breaks a decades old trend of buyers looking to cities characterized by apartment or condo living and bustling walkable main street shopping areas. According to a recent Realtor.com survey of people living in a high density urban setting, 30 percent said that the pandemic is prompting them to want to move by the end of the year and they want to live in a less dense area.
Buyers are now having second thoughts of living in a condo or a high rise. They are looking for a back yard, more space and more distance between them and their neighbors. They do not want to share common elements and press elevator buttons in this pandemic environment. And they are looking for more living area since corporations are allowing and encouraging employees to work from home. Work from home also then eliminates the commuting factor from living in more suburban settings.
But the pandemic is not the only factor in the growing interest in the suburbs. Millenniums are now in their thirty’s, married, and starting families. Although attractive when single, condo/apartment life does not really complement this changing lifestyle. As a result, this key home buying population is looking to the suburbs with larger, more traditional homes for their next stop.
Low mortgage rates are also helping with this shift in home movement. Rates have hit record lows for three consecutive weeks. Over the past several weeks, Freddie Mac has reported the average 30-year fixed mortgage rate dropping to all time lows, all the way down to 3.03 percent.
This is huge for today’s home buyers and they are capitalizing on these low rates. For a $300,000 mortgage in the 2000s having a 6.29 percent rate, a buyer would have a monthly payment of $1,855. Today, at the 3.03 percent rate, that same mortgage would be $1,270, a savings of $585 or 32 percent.
With these rates, buyers are now realizing that they can afford a home that they could not buy before. Home features and wants that were beyond their grasp, are now possible and new home buyers are looking to the suburbs to meet their requirements.
There is just one problem with this scenario. And that is the lack of available homes in the suburbs. And it has gotten worse with the pandemic. Active listings have gone down year over year in many areas including Bridgewater, Branchburg and Hillsborough. Last year at the end of June, Bridgewater had 274 active listings, Branchburg 111 and Hillsborough 235. At the end of June 2020, Bridgewater had 226 active listings, a drop of 17.5 percent, Branchburg 82 listings, and Hillsborough 197. So while buyer demand is there, available homes are not. Great news for sellers seeing prices still rising with increased demand, not so good for buyers seeing more multiple offers for available homes.