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When: July 28, 2020 04:00 PM Eastern Time (US and Canada)

Topic: Norton Mid -Year Forecast 2020

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REAL ESTATE IN THE COVID ERA

BUYING ● SELLING ● INVESTING ● LIVING

OTHER VIEWS

NEW HOMES

New home construction is perhaps the brightest spot in the economy right now. Thanks to The Great American Move, low mortgage rates, and a hyper awareness about living environment, new home sales in June exceeded those in the same month last year by 55%, according to our survey that captures ~21% of all new home inventory in the country.

Just who is purchasing a home during the pandemic? We found three fascinating characteristics of the new American home buyer.

1.  They prefer suburban.

The trend is accelerating faster than anyone could have predicted. The need for more space is driving suburban migration, along with thousands of young adults moving in with their parents. More than 1. 12 million 23-30-year old’s have moved “back home” since February, increasing the need for more space and influencing demand in the housing market.

2.  They are serious.

Our builder clients report extremely high-quality traffic. The most knowledgeable, tech-savvy, and pre-qualified buyers ever are making appointments and showing up ready to buy. Traffic conversion rates are probably at an all-time high.

3.  They are impatient!

As buyers swoop in to purchase, they are choosing ready-to-move-in inventory over to-be-built homes, even in the luxury segment. There were just 1.5 units of unsold inventory per community in June – a 20% year-over-year-decline. The surge in sales creates all sorts of opportunity for industry players, especially land developers, as the number of actively selling subdivisions is 5% lower than one year ago. We think price appreciation will increase if interest rates stay low, and the government continues to stimulate the economy.

The outlook for the home building industry remains unclear, as rising COVID rates and uncertainty around government stimulus may result in another leg down for the economy. But we continue to see opportunities for home builders, land developers, and other industry participants despite the uncertainty.

SOURCE: John Burns, Consultant

SUSTAINABLE INVESTING

We expect COVID and fear of COVID will persist for some time. Limiting the recovery of some sorts of social interaction – particularly in the most densely populated areas. We also suspect that entrepreneurs will find new sources of income by filling the needs of those now less interactive. Maintaining the income of those who have lost jobs will provide the fodder for those capitalists’ new goods and services. In previous recessions, income shrank, which made fewer eligible to borrow, and the risk of loss of sales made lenders less willing to lend. In the short run the savings rate may rise, but government – and not just in the U.S. – appears dedicated to making sure everyone has buying power and incentivizing business to return to normal, if possible.

SOURCE: McElvene Reports

EXODUS….THE GREAT MOVE

A combination of the coronavirus pandemic, economic uncertainty, and social unrest is prompting waves of Americans to move from large cities and permanently relocate to more sparsely populated areas. The trend has been accelerated by technology and shifting attitudes that make it easier than ever to work remotely. Residents of all ages and incomes are moving in record numbers to suburban areas and small towns.

A perfect storm of factors makes the decision to leave major cities like New York obvious. The dense nature of urban living and the lack of proper local government’s planning led to the coronavirus spreading five times faster in New York than the rest of the country. The city that never sleeps now resembles a ghost town in many areas after thousands of its wealthy and middle-class residents fled early in the pandemic.

As estimated, a quarter of a million New York residents will move upstate for good, while another 2 million could permanently move out of the state. More than 16,000 New York residents have already relocated to suburban Connecticut. The preliminary figures show New York is also losing citizens to rural New England and Florida in significant numbers. Similar trends are happening in other large urban areas. There is a political element within the domestic migration at play across the nation, but what is more telling is the level of movement to suburban areas and rural towns.

There has been a sharp uptick in interest in moving out to Montana, with the majority of new inquiries coming from California. Real estate sales in Montana are 10 percent higher than at this time last year. Rural Colorado, Oregon, and Maine have been similar upticks in property sales. Vermont is going through a renaissance in real estate, with an agent there remarking than “people are buying houses without even seeing them.”

Some of the biggest changes are less obvious, yet even the hidden trends support the idea that cities are emptying out. In March and April, over 2 million young people moved back in with their parents or grandparents. If the allure of cities declines further due to the risk of disease, a sputtering economy, and a future of telework, the flight to suburban and rural safety will continue well after a coronavirus vaccine hits the market.

Social unrest and urban crime rates spikes also raise the possibility of a sharp increase of exits from large cities. A breakdown in order, especially if police are defunded, could further downsize cities rebuilt with law and order approaches. Urban trends of the last 50 years are being reversed. Instead of smaller towns and rural areas facing the steep declines, large metropolitan areas may soon be the places bleeding citizens.

The moves and the circumstances that precipitated them will likely cause profound changes in the places receiving the most coronavirus refugees. It is still too early to forecast the political impacts of these demographic trends, but they could be significant. Floods of former urbanities could bring more taxes, restrictions, and regulations to these areas.

                                                            SOURCE: The Hill

QUOTE OF THE WEEK          

 When you live in an old house, you may not want to go into the basement after a storm to see what the rains have wrought. Choose not to look, however, at your own peril.

 The owner of an old house knows that whatever you are ignoring will never go away. Whatever is lurking will fester whether you choose to look or not.                

                                                                 SOURCE: Isabel Wilkerson

WE ARE N THIS TOGETHER…

NORTON NATIVE INTELLIGENCE

For More Information email info@gonorton.com