Where the lawns are greener
How the pandemic has changed American homebuyers’ preferences
They are flocking to warm suburbs
To detect these patterns, we used a monthly home-price index from Zillow, a website, for 2,563 of America’s 3,006 counties since 2018. We then built a statistical model to find what places with similar recent price-growth rates have in common.
Covid itself has hurt the market mainly in hard-hit areas. In the 100 counties with the highest official death rates from covid, price changes were four percentage points lower than you would otherwise expect.
Two-year house-price change by county, %
Pre-covid
Pandemic era
Lifestyle changes had bigger effects. Because city dwellers could not meet face-to-face, they dispersed, mostly to the suburbs. Holding other factors constant, price changes were 10-15 percentage points greater in middling-density counties like Williamson than in big cities or rural areas.
Covid has also led people to spend more time outdoors. In turn, buyers have bid up homes in areas where it seldom rains, summers are balmy or, like Collier, winters are mild. Weather explains 16 percentage points of the gap in price gains between sunny California and frigid Minnesota.
Pandemic-era house-price growth* associated
with a one-standard-deviation increase in:
Percentage-point
← decrease
increase →
-8
-6
-4
-2
0
2
4
6
8
Population density
From rural to exurban
From suburban to city
95% confidence interval
Weather
Winter temperature
Summer temperature
Rain quantity
Work-from-home ability combined with
pre-covid house prices, for counties with:
Remote workers moved to
places with cheap homes
Wealthier in-person
workers stayed put
High work-from-home & low prices
Low work-from-home & high prices
High work-from-home & high prices
Low work-from-home & low prices
Average household income
Official covid-19 death rate
*Above expected price change based on pre-pandemic price levels and trends
A final factor is remote labour. Before the pandemic, geographic inequality had been rising: areas that were already expensive saw the biggest price gains. In counties that rely on industries, like construction, in which people have to turn up to work, this trend has continued since 2020.
However, the pattern has reversed in areas dominated by industries amenable to remote work, such as finance. Since covid emerged, price gains have been large where housing was previously cheap, and smaller elsewhere. This supports recent research showing that remote workers tend to move to reduce their cost of shelter.
Sources:
"How many jobs can be done at home?", by J. Dingel and B. Neiman, Journal of Public Economics, 2022; NOAA; New York Times; US Census Bureau; Zillow Home Value Index; The Economist