The coronavirus pandemic has thrown a wrench into all facets of life, including paying rent or the mortgage for some, and for those in a better financial position, buying a home, selling one or moving to a new rental.
Stay-at-home orders and calls for social distancing have ruled out in-person home tours, and closed courts mean your local clerk’s office can’t process new property deeds.
While many people are choosing to delay a home purchase or sale and stay in place until the coronavirus pandemic has subsided – whenever that may be – others are still buying, selling and signing new leases. But as economic uncertainty and personal financial concerns grow, experts see some changes ahead in the housing market even after the threat of COVID-19 has peaked that will affect buying, selling, renting and new construction.
Here are some changes experts see on the horizon for the rest of 2020.
At the start of 2020, many economists expected homebuying to remain healthy throughout the year, bolstered by fairly low mortgage rates – below 4% – though held back slightly over concerns of a future recession to occur in 2021 or later.
When the coronavirus first caused stock markets to drop dramatically and the spread of COVID-19 led to widespread school and business closings and calls for people to remain in their homes, mortgage rates initially dropped in lenders' efforts to offset the scare.
On March 4, Freddie Mac reported the average 30-year, fixed-rate mortgage interest rate hit a historically low 3.29%, which led to a flood of would-be buyers and homeowners rushing to apply for a mortgage or refinance. Overwhelmed by interest, lenders raised rates slightly to 3.65% on March 19, but they have since fallen again to 3.33% as of April 2, according to Freddie Mac.
Even with the temporary increase, mortgage rates are now more than 0.5% below the rate at the same point in 2019, and they are well below rates from a historical perspective.
Unfortunately, low interest rates haven’t been able to sustain homebuyer activity. While it’s unclear whether this is primarily due to orders to remain at home or concerns about financial stability and employment – it’s likely a mixture of both – homebuyer activity has dropped dramatically. In a survey of more than 3,000 Realtors conducted March 16-17 by the National Association of Realtors, 48% reported a decrease in homebuyer interest due to the coronavirus outbreak.
“We’ve seen the impact of activity from all of this, so of course it’s not business as usual … but by no means has it stopped entirely,” says Skylar Olsen, director of economic research for real estate information company Zillow.
Experts aren't able to analyze many historic examples to show us how the market will react in the course of the pandemic and over the long term; the housing market is very different from what it was more than 100 years ago during the Spanish flu pandemic. Olsen notes the SARS epidemic that occurred in China starting in 2002 would serve as the best example.
During the SARS outbreak, Olsen explains, there was a marked drop in real estate transaction activity in affected parts of China like we’re seeing today in the U.S. Here, buyer activity fell first and fastest where the virus initially appeared and where isolation measures were first instituted – in Seattle, then San Francisco and much of the rest of California.
One hopeful takeaway from the SARS epidemic is that home prices, and the housing market in general, weren’t impacted significantly in the long run. Once the epidemic subsided, homebuyer and seller interest returned fairly quickly, Olsen says.
“What’s happening to us right now is not being driven by a market failure,” Olsen adds.
The question of the scale of impact that the housing market and the economy will see hinges on how prolonged the spread of COVID-19 will be. “If it lasts too long, will people’s affordability be completely eroded?” Olsen asks. If so, the recession we reasonably expect now due to the temporary decline in productivity and activity will become what Olsen refers to as a “real recession,” where returning to previous levels of productivity and activity will be much harder.
As homebuyer activity has dropped significantly, many sellers have decided to delay putting their homes on the market, both to continue social distancing and eliminate the need to move in the middle of a pandemic.
However, not everyone has the luxury of waiting. Fortunately, all is not lost. Daniel de la Vega, the Miami-based president of ONE Sotheby’s International Realty, which has locations throughout Florida, says that while activity has decreased, agents are still showing homes – by video tour – and homes are still going under contract.
Zillow reports that the last week of March, compared with the average from February, saw a 408% increase in users making 3D videos for homes on the market that aim to immerse prospective buyers and recreate the feeling of touring a home in person. Such videos have actually been a nationwide feature on Zillow’s website since 2019, but are no longer a "niche product," Olsen says. “It’s what you need if you want to keep getting your home through (the sale) process,” Olsen says.
Right now, the challenge is to make sure homes that are on the market don’t linger. Real estate listing agents are highly focused on “making sure they price these home appropriately so they don’t sit on the market too long,” de la Vega says.
The outlook for home sellers after the pandemic, like with buyers, depends on how long quarantines and the spread of the virus last. As more homes that would have been on the market at the start of spring remain unlisted, we can expect to see more go on the market shortly after the pandemic ends.
The more financially strained homeowners are, the more houses you’re likely to see for sale and the fewer buyers there will be, which is typical of a market at the beginning of a recession. Buyers who aren’t affected by layoffs and have enough savings to afford a down payment will benefit.
“I expect prices to go down a bit after this, and I expect people to be able to buy maybe their dream home that they wouldn’t be able to buy before this,” de la Vega says.
Sellers who are interested in a quick real estate deal through an iBuyer, like Opendoor or Zillow Offers, will have to wait. Both Opendoor and Zillow Offers, as well as similar firms, have paused transactions. This reduces the chances that iBuyer employees are exposed to COVID-19, and it also reduces the chances of mass attempts to liquidate homes for cash in a financial panic.
While de la Vega says he is preparing his agents to work through a worst-case scenario housing crisis, he remains optimistic that the housing market won’t suffer too long. “I don’t think that prices are going to go down as drastically as people think,” he says.
Renters are expected to be especially hard hit since they account for much of the workforce affected by closed businesses, reduced hours and layoffs.
Many first-time homebuyers who are holding off on a home purchase remain renters for now. This means rents are likely to rise in the near future due to continued demand. However, the financial uncertainty caused by COVID-19 is leading to both government and public pressure for landlords to give tenants suffering illness or job loss a break.
The U.S. Department of Housing and Urban Development has placed a moratorium on evictions for all rental properties insured by the Federal Housing Agency through mid-May. Governors and mayors throughout the U.S. are following suit and halting evictions as well, and some sheriff’s departments are announcing that they will stop carrying out lockouts for the time being.
Even where evictions haven’t been officially halted, many states have closed courthouses as a precautionary measure to prevent further spread of the coronavirus, effectively stopping eviction proceedings.
If unemployment remains high in the immediate aftermath of the pandemic, landlords can expect further regulation to help renters get back on their feet and avoid eviction.
Luxury apartment building projects may be put on hold if affordability becomes an issue, says Barry LePatner, a construction attorney and advisor, and author of “Broken Buildings, Busted Budgets: How to Fix America’s Trillion-Dollar Construction Industry.” This is because both developers and their lenders will question whether people will be able to afford to pay sky-high rents for luxury amenities.
For now, some renters appear willing to find a new rental as planned, regardless of the pandemic. In a survey of about 7,000 renters on rental listing and information site RentCafe.com between March 25-27, 52% said they still plan to move as soon as they find an apartment, and just 10% have chosen to put their search on hold.
While affording rent may become a long-term issue if unemployment remains high, landlords of mid- and low-price apartments can expect healthy demand, as people who would otherwise break into homeownership remain renters.
New Construction and Development
Since the Great Recession, residential construction has struggled to meet demand, contributing to climbing prices for existing homes throughout the U.S. Slowly, new construction has been ramping up: In 2019, there were roughly 1,370,300 new building permits for privately owned housing – the highest number since 2007, according to the U.S. Census Bureau.
Of course, the coronavirus pandemic changes the outlook for residential construction entirely. In particular, many states and cities have taken widely varied stances on whether residential construction is considered an essential service that will continue throughout the pandemic. California and Ohio are two states where residential construction continues, while in New York and the city of Boston, construction has stopped or is limited to roads, bridges, health care facilities and other projects considered part of emergency needs.
Where construction continues, workers are concerned for their safety, as many on-site tasks require workers to operate close together.
Inconsistent policies from state to state could lead to vastly different outcomes in terms of available new housing when the pandemic subsides. “The world will be a different place insofar as the real estate, development and construction industries are concerned,”LePatner says.
LePatner says lenders are already being more cautious about the construction and development projects they consider for loans; they don’t want to lend to a project that will struggle to attract tenants or buyers in this changing economy.
A key concern in the industry is the fact that construction laborers will have to find new work – 91% of construction workers in the country work for companies with 20 people or less, LePatner says, and those local small businesses are most at risk. “(Construction is) a real mom-and-pop shop industry,” LePatner says.
LePatner points to what occurred during the Great Recession, when many construction workers left the industry altogether for lack of available work, and says we can expect a construction labor shortage if prolonged isolation and economic concerns stop construction on a large scale for long enough to make workers seek jobs elsewhere.
Find an affordable place to call home.
Your ability to be financially comfortable is a key part of deciding where you want to live. Based on a survey of more than 2,000 U.S. residents on the importance of various factors in determining where to live, U.S. News weighted value at 25% – making it one of the key metrics used to calculate the Best Places to Live. To pinpoint the most affordable places on the list, we looked at what portion of the median annual household income goes toward the average cost to own or rent a home, plus the typical cost of utilities and taxes.25. Charlotte, North Carolina
25. Charlotte, North Carolina
Best Places 2019 Rank: 20
Metro Population: 2,427,024
Median Annual Salary: $50,150
Income Spent on Living Expenses: 21.77%
Charlotte takes the No. 25 spot on the list, with residents spending just 21.77% of their household income on housing expenses. At $50,150, the median annual salary for Charlotte residents just about matches the national average of $50,620.24. St. Louis
24. St. Louis
Best Places 2019 Rank: 81
Metro Population: 2,804,998
Median Annual Salary: $49,180
Income Spent on Living Expenses: 21.53%
Missouri’s largest metro area offers more affordability compared with other places in the U.S. of the same size. For instance, Baltimore and Tampa, Florida, can’t match the 21.53% cost of living compared to household income that St. Louis offers.23. Little Rock, Arkansas
23. Little Rock, Arkansas
Best Places 2019 Rank: 88
Metro Population: 730,346
Median Annual Salary: $43,780
Income Spent on Living Expenses: 21.52%
The capital of Arkansas is the 23rd-most affordable place to live on our list, with a blended annual household income, which includes household income for both renters and homeowners, of $55,911. After housing costs are covered, Little Rock residents typically keep more than 78% of their income to dedicate to other expenses.22. Syracuse, New York
22. Syracuse, New York
(Tony Shi Photography/Getty Images)
Best Places 2019 Rank: 54
Metro Population: 659,262
Median Annual Salary: $49,850
Income Spent on Living Expenses: 21.51%
This upstate New York metro area is a far more affordable living option compared to New York City, one of the most expensive places to live in the U.S. Syracuse is also one of the few metro areas that's not located in Middle America in the 25 Best Affordable Places to Live list.21. Minneapolis-St. Paul
21. Minneapolis-St. Paul
Best Places 2019 Rank: 6
Metro Population: 3,526,149
Median Annual Salary: $56,030
Income Spent on Living Expenses: 21.5%
Minneapolis-St. Paul is the most populous metro area on the 25 Best Affordable Places to Live list. Not only are residents spending a smaller portion of their household income on housing – just 21.5% – they’re also bringing home more money. The median annual salary is $56,030.20. Lexington-Fayette, Kentucky
20. Lexington-Fayette, Kentucky
Best Places 2019 Rank: 29
Metro Population: 500,689
Median Annual Salary: $43,270
Income Spent on Living Expenses: 21.49%
Lexington-Fayette has deep roots in the equestrian and agriculture industries, with plenty of farmland just outside the city centers. This helps keep the metro area’s cost of living low, at just 21.49% of the household income.19. Raleigh and Durham, North Carolina
19. Raleigh and Durham, North Carolina
Best Places 2019 Rank: 10
Metro Population: 1,824,266
Median Annual Salary: $53,788
Income Spent on Living Expenses: 21.47%
Referred to as the Research Triangle on account of the plethora of research companies and major universities based in the area – including Duke University, the University of North Carolina—Chapel Hill and North Carolina State University – Raleigh and Durham enjoy a relatively low cost of living. Residents spend just 21.47% of their household income on living costs.18. Tulsa, Oklahoma
18. Tulsa, Oklahoma
Best Places 2019 Rank: 83
Metro Population: 977,869
Median Annual Salary: $45,260
Income Spent on Living Expenses: 21.45%
Residents of the Tulsa area spend just 21.45% of the median household income on the cost of living. The overall cost of owning a home in Tulsa is low as well: The median home price is just $149,000, according to Zillow, which is well below the national average of $227,025.17. Greenville, South Carolina
17. Greenville, South Carolina
Best Places 2019 Rank: 22
Metro Population: 872,463
Median Annual Salary: $43,230
Income Spent on Living Expenses: 21.44%
Ranking No. 22 on the overall Best Places to Live list, Greenville enjoys a low cost of living with residents spending just 21.44% of the median household income on housing. And a steadily growing number of people are able to benefit from this low cost of living: Greenville's population grew by 4.9% due to net migration between 2013 and 2017, according to the U.S. Census Bureau.16. Kansas City, Missouri
16. Kansas City, Missouri
Best Places 2019 Rank: 49
Metro Population: 2,088,830
Median Annual Salary: $49,460
Income Spent on Living Expenses: 21.43%
This metro area that straddles both Missouri and Kansas is home to more than 2 million residents, but it still maintains greater affordability than most major metro areas. Kansas City residents dedicate just 21.43% of their household income to the cost of living.15. Wichita, Kansas
15. Wichita, Kansas
Best Places 2019 Rank: 79
Metro Population: 642,339
Median Annual Salary: $43,880
Income Spent on Living Expenses: 21.42%
While there are more than 600,000 residents in this Kansas metro area, Wichita maintains a small-town feel – with a low cost of living to match. Residents use just 25.88% of their household income to cover rent or mortgage payments, utilities and taxes.14. Omaha, Nebraska
14. Omaha, Nebraska
Best Places 2019 Rank: 32
Metro Population: 914,190
Median Annual Salary: $47,660
Income Spent on Living Expenses: 21.29%
With a median annual salary of $47,660, Omaha takes the No. 14 spot. The largest metro area in Nebraska, which ranked a bit higher at No. 8 last year, has seen a slight increase in the cost of living. Still, residents spend just 21.29% of their household income on housing.13. Youngstown, Ohio
13. Youngstown, Ohio
(Getty Stock Images)
Best Places 2019 Rank: 97
Metro Population: 548,821
Median Annual Salary: $41,360
Income Spent on Living Expenses: 21.18%
With a little more than a half-million residents, the Youngstown metro area has a cost of living that requires 21.18% of the median household income. The median home price for the metro area is low as well, at just $86,850, more than $140,000 below the national average.12. Louisville, Kentucky
12. Louisville, Kentucky
(Bob Stefko/Getty Images)
Best Places 2019 Rank: 64
Metro Population: 1,278,203
Median Annual Salary: $45,100
Income Spent on Living Expenses: 21.11%
As the No. 15 Best Affordable Place to Live in 2018, Louisville has climbed three spots to rank 12th on the list this year. With a median annual salary of $45,100, Louisville residents spend 21.11% of their household income on living expenses.11. Buffalo, New York
11. Buffalo, New York
Best Places 2019 Rank: 52
Metro Population: 1,136,670
Median Annual Salary: $48,180
Income Spent on Living Expenses: 21.11%
Beating Louisville by a ten-thousandth of a percent for the portion of income that goes toward housing, Buffalo is the second upstate New York metro area to make the top 25. Residents in the Buffalo area benefit from a low cost of living, with just 21.11% of the median household income spent on living expenses.10. Cincinnati
Best Places 2019 Rank: 39
Metro Population: 2,156,723
Median Annual Salary: $48,890
Income Spent on Living Expenses: 21%
Cincinnati residents spend slightly less than Buffalonians on housing costs. The typical cost of living is 21% of the median household income.9. Baton Rouge, Louisiana
9. Baton Rouge, Louisiana
Best Places 2019 Rank: 109
Metro Population: 828,741
Median Annual Salary: $44,500
Income Spent on Living Expenses: 20.79%
It may be ranked No. 109 on the overall Best Places to Live list, but Baton Rouge ranks high when it comes to affordability. Baton Rouge residents spend just 20.79% of their income on housing costs.8. Lafayette, Louisiana
8. Lafayette, Louisiana
Best Places 2019 Rank: 96
Metro Population: 487,633
Median Annual Salary: $39,940
Income Spent on Living Expenses: 20.76%
The second Louisiana metro area on the Best Affordable Places to Live list, Lafayette has a cost of living of just 20.76% of the median household income. The low cost of living helps balance out the area's lower median annual salary, which at $39,940 is more than $10,000 below the national average.7. Indianapolis
Best Places 2019 Rank: 38
Metro Population: 1,989,032
Median Annual Salary: $48,030
Income Spent on Living Expenses: 20.72%
Indianapolis is one of two Indiana metro area to crack the top 10 of the Best Affordable Places to Live list. Indianapolis residents spend just 20.72% of their household income on rent, mortgage payments, utilities and taxes.6. Grand Rapids, Michigan
6. Grand Rapids, Michigan
Best Places 2019 Rank: 13
Metro Population: 1,039,182
Median Annual Salary: $44,770
Income Spent on Living Expenses: 20.68%
Money goes further in Grand Rapids than most parts of the U.S. While the median annual salary is below the national average of $50,620, metro area residents spend just 20.68% of the median household income on living expenses.5. Pittsburgh
Best Places 2019 Rank: 50
Metro Population: 2,348,143
Median Annual Salary: $48,580
Income Spent on Living Expenses: 20.51%
Located in the western part of Pennsylvania, Pittsburgh enjoys a more affordable cost of living than Philadelphia to the east. Residents of the Steel City and its surrounding area spend just 20.51% of their household income on rent or mortgage payments and utilities.4. Fayetteville, Arkansas
4. Fayetteville, Arkansas
Best Places 2019 Rank: 4
Metro Population: 514,166
Median Annual Salary: $45,830
Income Spent on Living Expenses: 20.44%
Fayetteville continues to grow in population – having increased by 6.94% between 2013 and 2017 due to net migration alone – but the area maintains a low cost of living. Residents spend just one-fifth of their household income on housing costs.3. Des Moines, Iowa
3. Des Moines, Iowa
Best Places 2019 Rank: 5
Metro Population: 623,113
Median Annual Salary: $50,600
Income Spent on Living Expenses: 20.11%
Des Moines has long been known for its low cost of living. After taking the top spot in the Best Affordable Places to Live in the U.S. ranking in 2016 and 2017, the capital of Iowa holds onto its No. 3 spot from last year. Des Moines residents spend just 20.11% of the median annual household income on living costs.2. Fort Wayne, Indiana
2. Fort Wayne, Indiana
Best Places 2019 Rank: 40
Metro Population: 429,060
Median Annual Salary: $43,590
Income Spent on Living Expenses: 19.57%
Residents of Fort Wayne, one of the least-populated metro areas in the Best Places to Live ranking with under 500,000 residents, benefit from spending less on housing. The cost of living in Fort Wayne is just 19.57% of the median household income.1. Huntsville, Alabama
1. Huntsville, Alabama
Best Places 2019 Rank: 11
Metro Population: 444,908
Median Annual Salary: $53,600
Income Spent on Living Expenses: 19.3%
Huntsville is the most affordable place to live out of the 125 most populous metro areas in the U.S. for the second year in a row. An above-average median annual salary and low cost of living mean Huntsville residents are keeping more money in their pockets to devote to other things. Just 19.3% of the median household income in Huntsville goes toward housing costs.The Best Affordable Places to Live in the U.S. include:
The Best Affordable Places to Live in the U.S. include:
- Huntsville, Alabama
- Fort Wayne, Indiana
- Des Moines, Iowa
- Fayetteville, Arkansas
- Grand Rapids, Michigan
- Lafayette, Louisiana
- Baton Rouge, Louisiana
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Updated on April 2, 2020: This story was published at an earlier date and has been updated with new information.
Corrected on April 3, 2020: A previous version of this story incorrectly stated the city where Daniel de la Vega works. He is based in Miami.
She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.
Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at firstname.lastname@example.org.
May 11, 2020
U.S. News analyzed the 150 most populous metro areas to rank places to live by category.