Rise of the Suburbs, July Homes Sales Shoot to 14 Yr High: US Cities Seeing Their Fortunes Change [View all]

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Last edited Fri Aug 21, 2020, 11:54 AM - Edit history (2)

'The rise of the suburbs: Why America's cities are seeing their fortunes turn.' David Grasso, Op. The Hill, 8/20/20. - Ed.:

Before the pandemic, the signs were everywhere that America's big cities were facing an uncertain future. Worrying levels of crime, garbage on the street, spiking homelessness and unaffordable housing all fraying the social fabric of our flagship cities. This across-the-board decline in quality of life, nonsensical public policy and high taxation in large cities pushed some people to reconsider life as urban dwellers. People whispered to their friends about how life had become more miserable in cities. Still, leaving was probably off the table.

Big cities were home to the best-paying jobs, who could imagine living somewhere else and doing well? Without warning, the pandemic changed everything. COVID-19 is making life in major populated areas more uncertain than ever.

At the same time, major corporations began to normalize remote work, and some even boldly proclaimed that their employees could work from home forever. In a matter of months the tide has turned with dire economic consequences for urban areas. The suburbs that millions ran away from for a cosmopolitan city life are back in demand. People stuck in cities see their lives upended by a pandemic, civil unrest and local governments asleep at the wheel. Politics aside, our urban areas are confronting challenges that we haven't seen in a very long time. It's igniting an exodus of people and capital that may be difficult, if not impossible, to reverse.

People who could, left & settled elsewhere with better schools, easier social distancing & larger homes where they can work with ease. Some think the migration is temporary, or new people will take their place in cities post-pandemic.

I believe that the outward movement of business is a far more worrying trend. Ominously, corporate America is waking up to discover that having a presence in cities such as New York doesn't make much economic sense anymore. A chain store in Manhattan might have less foot traffic than a suburban location where the rent is much cheaper. The economics of doing business in an urban setting are upside down and don't look like they're going to improve anytime soon. If big business is having trouble making the rent, imagine the bludgeoning for small companies in major cities. Many simply will not survive into next year.

Politically, some people will relish the opportunity to dance on the graves of our large cities as they face extraordinary difficulties. In reality, the decline of our major cities is terrible news for all Americans. I do not like the idea of going back to where we were 30 years ago, where the economic center of gravity was in the suburbs. America's cities staged an incredible comeback in recent decades, making our country a much better place. It's going to be hard work to stem the tide of human and capital flight to the suburbs...

Full Article, The Hill,
https://www.msn.com/en-us/news/politics/the-rise-of-the-suburbs-why-america-s-cities-are-seeing-their-fortunes-turn/ar-BB18cPFw
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- Aug. 15, People lined up to purchase homes in Ontario, Calif. at the ShadeTree dvmt. by Landsea Homes, (Photo: Molly Peters for Bloomberg Businessweek).

- 'U.S. Existing Home Sales Shoot to Near 14-Year High in July,' By Dan Burns, Reuters, NYT, Aug. 21, 2020. - Ed.:

Washington— U.S. home sales rose at a record pace for a 2nd straight month in July & home prices hit a record as *historically low interest rates boosted home demand even as the pandemic put millions of people out of work. The National Assn. of Realtors said on Friday existing home sales rose 24.7% to a seasonally adjusted annual rate of 5.86 million units last month. June data was revised down slightly to a 4.70 million unit pace from the originally reported 4.72 million. July's rise was the 2nd straight increase following a record monthly increase in June, & lifted the sales pace above the 5.76 million level in Feb. before the pandemic triggered a brief cratering in sales. July's level was the highest since Dec. 2006.

> “The housing market is well past the recovery phase & is now booming with higher home sales compared to the pre-pandemic days,” said NAR’s chief economist. “With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”

Economists polled by Reuters had forecast sales rising 14.7% to a rate of 5.38 million units in July. Existing home sales, which make up about 85% of U.S. home sales, rose 8.7% on a year-on-year basis in July. The 30-yr fixed mortgage rate is at an average of 2.99%, hovering near levels last seen in the early 1970s, according to Freddie Mac data. Earlier this week data showed homebuilding accelerating by the most in nearly 4 years in July. Housing has been a bright spot in the economy even as other sectors suffer amid widespread coronavirus infections that have slowed commerce & kept unemployment high.

More than 28 million people were collecting jobless benefits at July's end. The pandemic tipped the economy into recession in Feb., ending a record-long expansion that had brought U.S. unemployment to a 50-yr low.

Home sales rose in all 4 regions in June. There were 1.5 million previously owned homes on the market in July, down 21.1% from a year ago. The median existing house price increased 8.5% from a year ago to a record $304,100 in July. At July's sales pace, it would take 3.1 months to exhaust the current inventory, down from 4.2 months a year ago. A 6-to-7-month supply is viewed as a healthy balance between supply & demand.
https://www.nytimes.com/reuters/2020/08/21/business/21reuters-usa-economy-housing.html
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More, * 'Covid Pandemic Fuels U.S. Housing Boom As Urbanites Swarm Suburbs,' Bloomberg News, Aug. 20, 2020.
https://www.bloomberg.com/news/articles/2020-08-20/covid-pandemic-fuels-u-s-housing-boom-as-urbanites-swarm-suburbs

* 'Manhattan Apartment Sales Plunge While The Suburbs Boom,' By Anna Bahney, CNN Business, Aug. 6, 2020.
https://www.cnn.com/2020/08/06/success/manhattan-pending-home-sales-suburbs/index.html