NCSHA Washington Report | October 18, 2024
Pundits of various stripes coined memorable, somewhat ominous phrases to describe the apparent transformations in American life that seemed to be unfolding with astonishing speed during the early months of the Covid pandemic. A batch of new reports sheds light on which changes actually took hold — and suggests housing affordability will play a large role in how they may evolve.
A Not-So-Great Migration. State-to-state moves increased in 2020 and 2021, almost certainly partly due to Covid, but they never amounted to the “great pandemic migration” some proclaimed. A new report from the Brookings Institution finds “there were few metro areas in which that movement significantly altered metropolitan population or income or represented a huge break from pre-pandemic norms… and the increased volume of migration that prevailed at the height of the pandemic in 2020 – 21 had already subsided by 2021 – 22.”
Brookings and other analysts agree though the pre-pandemic trend that saw states — and areas within states — with less expensive housing draw residents from more expensive places accelerated, and continues today. An example in the news this week: A Tulsa, OK, program that offers $10,000 to people who move to the city for at least a year is touted as saving participants $25,000 in housing costs and has “convinced extended family members to leave the sky-high rents and mortgages of the coasts behind.”
Urban Gloom But Not Doom (Yet). Major American cities are in much better shape today than many predicted they would be during the early-Covid period of widespread lockdowns, sharp crime spikes, and mass adoption of remote work. Twenty-five of the 26 largest downtowns have more residents today than just before the pandemic, and violent crime is down in most. The worst of pandemic-driven decline was “episodic and has shown signs of a reversal,” asserts a new report by Cushman & Wakefield.
Yet most large downtowns remain plagued by high rates of excess office space, the likely catalyst of an “urban doom loop” that may still play out in some. CBRE and other analysts see an urgent need for central cities to provide more housing, from office conversions, through zoning reforms, and with tax incentives. The Urban Land Institute reports: “Developers and policymakers are racing together to find ways to more efficiently convert vacant or outdated office buildings into attractive residential towers.”
A Revolution with Uncertain Residential Impact. Before the pandemic, just under six percent of Americans (nine million people) worked remotely full time. Today, nearly 14 percent (22 million) do — and more than half of all workers report working on a hybrid schedule. Early on, the “remote work revolution” was “mainly responsible for soaring home prices and rentals,” according to the Federal Reserve Bank of San Francisco, as urban white-collar workers sought refuge in more affordable suburbs and small towns.
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The future may be different. A study by the Economic Innovation Group and several others concludes “that even though remote work has increased rents in the short-run, they are likely to decline going forward and in the long-run may end up lower than pre-pandemic.” Time will tell.
Stockton Williams | Executive Director