“Why the housing market has never been Weider”, that is a title of an article I just read in The Atlantic.
f you think the Boston real estate market is behaving very, very strangely these days, that probably means you’re paying attention. According to The Atlantic:
In almost any other year, a weak economy would cripple housing. But the flash-freeze recession of 2020 corresponded with a real-estate boom, led by high-end purchases in the (Boston) suburbs and small towns. Even stranger, in America’s big metros, home prices and rents are going in opposite directions. Home values increased in all of the 100 largest metros in the U.S., according to Zillow data. But in some of the richest cities— Seattle; New York; Boston; (yet)rent prices fell, many by double-digit percentages. In many cases, the gap was absurdly large. In San Jose last year, home prices rose by 14 percent (the sixth-largest increase in the country) but the area’s rents fell 7 percent (the sixth-largest decline)
Understanding this divergence begins with understanding the broader divergence of our “K-shaped” economy, in which the K represents the forking fortunes of the rich and poor during the pandemic. While many hourly workers in restaurants and physical stores have been hit hard by lost wages and unemployment, millions of knowledge workers in white-collar industries such as tech and finance rode out the pandemic by staying (and staying, and staying) at home. They relieved their cabin fever with a heavy dose of online real-estate shopping
According to Chris Salviati, an economist with the online rental market Apartment List, rents are rising again in almost all of the hardest-hit rental markets, including San Francisco, Boston, and Washington, D.C. As rents increase, so will buyer’s remorse. We are already seeing the emergence of a new genre of feature profile in major newspapers: the city slicker who moved to the suburbs, and hates it there.
One needn’t frame every story as a tale of generational warfare, but the generational angle to this story might be the most enduring one. The last decade has punished Millennials with a Great Recession, a slow recovery, and a housing shortage. But the next decade could see Generation Z moving into cities that offer great bargains for young residents, even as they benefit from a booming economy, full employment, and a surge in housing construction