The COVID-19 pandemic turned the real estate market inside out, as the big cities swiftly lost their megawatt appeal—with their home prices and rents plummeting accordingly—while the farthest-out, sleepiest suburbs suddenly became new hot spots for homebuyers.

The exurbs, as these outer suburbs are called, experienced the highest price growth over the past year, according to Realtor.com®. While suburbs closer to the urban core remained the most popular with buyers, exurbs saw the biggest increase in interest from home shoppers.

That surge was driven by the fear of COVID-19, the rise of remote work, and the search for more affordable homes with enough square footage in which to quarantine with the whole family. Builders have also been putting up new homes in these areas, where land is cheaper and more plentiful.

However, the future of the exurbs in a post-pandemic world remains uncertain. Many workers will eventually have to return to their offices, even if it’s just a few days a week, making the issue of a commute relevant once more. Plus, exurbs have historically been more vulnerable to downturns—they were hammered in the Great Recession. Fears of a bubble, however unlikely, could give buyers pause.

These areas could find themselves competing with the appeal of urban life again. Big cities became more attractive as vaccines became available and businesses and entertainment venues reopened their doors.

However, the emergence of the delta variant could complicate things further.

“The jury is still out,” says Realtor.com Chief Economist Danielle Hale. “It’s possible that some areas that saw prices rise because they were particularly attractive during the pandemic might not be able to sustain those high prices. … The factors that drew people to those areas, like having a lot of space and being far away from everything else, may change.”

Will home prices in the exurbs eventually fall?

Prices have grown the most in the exurbs during the pandemic. Depicted above are exurban ZIP Codes in the 100 largest metropolitan areas with enough listings to derive meaningful trends. (Sabrina Speianu/Realtor.com)

The big question for many is whether prices in the exurbs will continue to go up—or if they’ll decline. Since buying a home is the largest investment most people will ever make, most buyers want to be as sure as they can that the value of that investment won’t go down.

The shortage of homes for sale and higher prices in the closer-in suburbs and cities may continue to force aspiring homeowners on a budget and struggling renters to move farther out to find more affordable housing. That demand could keep prices in the exurbs from falling.

“The desire for affordability, which is only going to become more important as interest rates go up, is going to keep interest in the suburbs and outer suburbs high. They have always been the escape valve for high city prices,” says Hale.

“It’s not a new phenomenon that, when people can’t afford the city, they look further out,” she continues.

The potential staying power of the work-from-home phenomenon will also likely prevent prices from slipping too much. If workers can go entirely remote or commute only once or twice a week, they may be more likely to seek out cheaper real estate in a more bucolic setting.

“I don’t think prices will drop off dramatically,” says Kelly Mangold, who specializes in real estate economics at the consulting firm RCLCO. “Everyone’s not going back to the office five days a week anytime soon.”

Investors, who typically seek out cheaper housing they can buy and flip or rent out, may also give these areas a boost.

“We’ll still see healthy price appreciation,” says Devyn Bachman, vice president of research at John Burns Real Estate Consulting. Or in certain areas that experienced rapid price hikes, “you may see small corrections in these markets.”

On the flip side, more square footage and larger backyards require more maintenance, and many cash-strapped buyers may not want to pay to have all that grass mowed or the snow shoveled. It’s also more expensive to heat a 3,000-square-foot home than one half the size.

Higher mortgage interest rates could also hurt prices in the exurbs. Rates fell below 3% for an average 30-year fixed-rate mortgage during the pandemic. This made ultrahigh prices more palatable, because the lower rates offset some of the higher costs, helping monthly mortgage payments stay affordable. If rates rise, home prices won’t have the same room to rise. They could even dip in the places that experienced the biggest run-up in prices.

“The mortgage payment becomes very high,” says Ali Wolf, chief economist of building consultancy Zonda. “There are locals who will just get crushed.”

But housing experts don’t expect a full-blown crash even if prices do correct a bit. There is more demand for housing than there are homes available—the opposite of what happened in the mid-2000s. And unlike in the last real estate bubble, only the most qualified borrowers are being approved for mortgages, lessening the chances of another foreclosure crisis.

Builders are putting up more homes in the exurbs

The thing about remote suburbs is that they have potential for development—and builders have taken notice. There’s more land available for building in these areas.

Roughly 9.2% of construction on single-family homes was in the exurbs of large metropolitan areas in the second quarter of 2021, according to the National Association of Home Builders. That’s in addition to the 8.9% of construction in the outer suburbs of medium-sized metropolitan areas.

“Exurbs have great potential for development,” says Realtor.com’s Hale. “They have more open space for builders to build and create things, which is a bit harder to come by the closer in you get to the city.”

Putting up more homes brings in new residents, which attracts more grocery stores, shops, restaurants, and entertainment. These amenities in turn make these communities more desirable and could keep the housing markets in these areas strong, unless the supply of homes outstrips the demand for them.

But overbuilding doesn’t seem too likely. Builders have a lot of catching up to do to meet demand, and they’ve  been skittish since the last real estate bust.

“Builders are skeptical about how much this may last and are being more conservative about shifting their pipeline in that direction,” says Hale.

Origination: https://www.realtor.com/news/trends/future-of-the-exurbs-where-prices-jumped-during-pandemic/

 

Prewar. The very word conjures images of the elegance and grace of an earlier, more refined and less cynical time. When employed to describe buildings, the term is most often used to denote the charming, sophisticated but all-too rare pre-1941 residential structures of Manhattan, many of them sprinkling the storied Upper West Side. 

Even more, limited in number are prewar conversions, which offer the aesthetics of their earlier epochs but also incorporate amenities demanded by today’s discerning buyers. The developers of these conversions have updated the layouts, ensuring they remain true to the buildings’ historic essence, while delivering a more open and functional flow.

It’s no surprise UWS prewar conversions like Astor, 378 West End Avenue and the recently unveiled Marlow are increasingly sought by buyers who relish history and tradition as much as the creature comforts of today’s newer ground-up developments.

Redesigning prewars for contemporary lifestyles requires of architects a balancing act of sorts. When designing contemporary luxury residences in prewar buildings, architects must comprehend the “bones” of the buildings. Prewars possess charm, architectural grace, scale and an emphasis on room-making. The result is well-proportioned space imbued with intimacy and character. Architects try to keep what makes each prewar structure special, while re-interpreting the building for modern living, says Julie Nelson, partner at BKSK Architects, the firm responsible for Marlow.

The Astor, 235 West 75^th Street

Delivering Gilded Age glamor for a new generation in the heart of the Upper West Side, The Astor is being called one of the most celebrated landmarked condominiums in New York City real estate history. Renowned for its trademark trio of towers on Broadway between 75^th and 76^th Streets, The Astor represented the epitome of luxury when it debuted around the turn of the century. Recently restored by design firm Pembrooke & Ives, it marries classic architectural style with the most modern of features and finishes.

378 West End Avenue

Positioned on the Upper West Side’s grand residential boulevard, this is a time-honored and intriguing condominium located steps from Riverside Park. COOKFOX handled design both inside and out, while Alchemy Properties developed the property. Among its most arresting features are unobstructed views over landmarked buildings, a generous share of social, fitness and wellness amenities and elegant residences blending prewar space with the abundant natural light and contemporary design of modern buildings.

Marlow, 150 West 82^nd Street

Developed by Slate Property Group and BentallGreenOak, designed by BKSK Architects and featuring a model unit decorated by Nate Berkus and Jeremiah Brent, Marlow is a 10-story, 27-residence building with homes that range from studios to four-bedroom penthouse duplexes.

The 1926 building delivers a broad array of sizes and floor plans, and such features as prewar beamed ceilings soaring to nine feet, with Windsor Pinnacle series double-hung windows and walk-in closets throughout.

The kitchens are distinguished by custom white oak cabinetry with lacquered white bronze detailing, a specialty etched glass backsplash and Kohler brushed brass finishes. Prices start in the high $600,000s. Outside, some of the Upper West Side’s most appealing attractions, including Central Park, high-end restaurants, cafes, music venues and landmarks, all are easily accessible to building residents.

“This pre-war conversion building has a completely different appeal opposed to ground-up, new development,” says Shaun Osher, CEO of CORE, the boutique brokerage that is the exclusive sales team for Marlow. CORE launched sales this summer.

“It incorporates the best of both worlds. The Marlow encapsulates history, charm and architectural integrity while boasting sophisticated, modern-day finishes, layouts and amenities buyers are seeking. There is an increased demand for residences that offer exclusivity, outdoor space and the convenience of a condo unit that has the feel of a single-family home, which is exactly what Marlow delivers.”

Origination: https://www.forbes.com/sites/jeffsteele/2021/08/18/character-meets-comfort-in-uws-prewar-conversions/?ss=real-estate&sh=4622b7bf742a 

 

It’s a seller’s market — and those who list their homes have the potential to make a lot of money.

Right now may not be a good time to buy a home. Though mortgage rates are very competitive, home prices are extremely inflated because there’s not a lot of inventory to go around.

But while today’s real estate market may be challenging for buyers, it’s great for sellers. In fact,

Some 53% of sellers expect that they’ll get their asking price once they put a home on the market, according to a recent survey by Realtor.com. But 24% expect to get above their asking price.

Why are homes selling above asking prices?

In a normal housing market, you might find the occasional bidding war, where two or more buyers duke it out over the same home, all the while raising its sale price in the process. But in today’s housing market, record low inventory is making bidding wars more of a mainstay. In fact, around 20% of sellers expect their home to wind up in a bidding war.

Not only are bidding wars driving home prices up, but many potential buyers choose to make an offer on a house that is above the seller’s asking price in an attempt to avoid a bidding war. And if you’ve been having a hard time getting an offer accepted, that’s a tactic you may want to try out, too.

Imagine a home is listed for $300,000. In a bidding war, that home price could eventually be driven up to $350,000 if competing buyers keep raising their offers by $5,000 or $10,000 increments in an effort to win.

Now, let’s say you’re interested in that $300,000 home, and you decide to make an initial offer of $320,000, or $20,000 over asking price. The seller may be so happy with that offer that they decide to accept it on the spot and put the home under contract. That could, in turn, save you money on that home — even if you do end up paying more than what the home is listed for.

In fact, some sellers in today’s market may be slightly underpricing their homes in an effort to drive a bidding war. But again, coming in with an offer above asking price could work to your benefit as a buyer.

How much should buyers offer?

Making an offer above a home’s asking price could lead to a contract. But be careful:  you don’t want to go overboard.

First of all, the higher a price you pay for your home, the higher your mortgage payments will be. Also, if the home you’re buying doesn’t appraise for its sale price, you may not be able to get the mortgage you need to finance that home.

In today’s red-hot housing market, sellers clearly have the upper hand, and their confidence is evident. Making an offer above asking price could help keep the home you want out of a bidding war. And that could, in turn, save you not only a lot of money, but a world of stress.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. The Motley Fool has a disclosure policy.

Origination: https://www.usatoday.com/story/money/personalfinance/real-estate/2021/07/01/24-percent-of-home-sellers-expect-to-get-more-than-their-asking-price/46857561/

NAR released a summary of existing-home sales data showing that housing market activity this June increased 1.4% from May 2021. June’s existing-home sales reached a 5.86 million seasonally adjusted annual rate, and June’s sales of existing homes increased 22.9% from June 2020.

The national median existing-home price for all housing types rose to $363,300 in June, up 23.4% percent from a year ago. Home prices have continued to rise, and this marks the 112th consecutive month of year-over-year gains.

Regionally, all four regions showed double-digit price growth from a year ago. The Northeast had the largest gain of 23.6% followed by the South with an increase of 21.4 %. The Midwest showed an increase of 18.5% and the West had the smallest price gain of 17.6% from June 2020.

June’s inventory inclined 4.1% from last month, standing at 1.26 million homes for sale and indicating some slight easing of the tight inventory condition.

However, compared with June of 2020, inventory levels are 18.2% lower. This would mark 25 straight months of year-over-year declines. It will take 2.6 months to move the current level of inventory at the current sales pace, well below the desired pace of 6 months.

Demand remains strong as home buyers are snatching listings quickly off the MLS, and it takes approximately 17 days for a home to go from listing to a contract in the current housing market. A year ago, it took 24 days.

From May 2021, all four regions had inclines in sales except the South, where sales were flat. The Midwest had the biggest gain of 3.1% followed by the Northeast with an incline of 2.8%. The West region had the smallest increase in sales of 1.7%.

From a year ago, all four regions showed double-digit inclines in sales. The Northeast region had the largest gain of 45.1% followed by the West with an incline of 23.7%. The South had an increase in sales of 19.8% followed by the Midwest with the smallest gain of 18.8%.

The South led all regions in percentage of national sales, accounting for 44.3% of the total, while the Northeast had the smallest share at 12.6%.

In June, single-family sales increased 1.4% and condominiums sales were up 1.4 compared to last month. Single-family home sales were up 19.3% while condominium sales were up 56.5% compared to a year ago, reflecting the impact of the pandemic lockdown. The median sales price of single-family homes rose to 24.4% at $370,600 from June 2020, while the median sales price of condominiums rose 19.1% at $311,600.

Origination: https://www.nar.realtor/blogs/economists-outlook/june-2021-existing-home-sales-bounce-back-as-home-prices-hit-second-highest-pace