Changing our idea of home

Remote Work Brought the City to the Suburbs
For the better part of 2020 and 2021, the housing market was flipped upside down. Home buyers navigated a hot housing market during the pandemic despite a low housing supply, driven by a host of reasons but mainly the ability to work from home. Being able to work remotely since the pandemic triggered a record surge in home buyers leaving big cities in favor of suburban and rural locations. Prior to the pandemic, this relocation trend became apparent due to the high costs of living in large cities but has since accelerated. Home buyers were taking advantage of working remotely, no longer tethered to locations close to their workplace – made possible by companies embracing technology. Record-low interest rates starting in March 2020 in Canada and the United States made this move even more advantageous for home buyers.

Lockdowns, and health and safety concerns during the pandemic had home buyers looking for a more affordable home, more living space, additional green space and a balanced life. These changes have clearly impacted the housing market across North America with housing prices in suburban, rural and cottage areas soaring, even outpacing large cities. In Canada, North Bay and Barrie markets saw high double-digit year-over-year home sale price percentage increases from 2020 to 2021. Small towns in the U.S. including Martin, Tennessee and Kendallville, Indiana have seen some of the largest price jumps. These locations saw bidding wars on properties which were previously unheard of in these areas.

After many left cities during much of the pandemic, cities are bouncing back. Just how quickly urban populations can return to their pre-pandemic highs is up for question. The speed of the rebound depends on when employers call workers back to the office. Many employers are coming around to remote or hybrid work, while others have slowly begun calling their employees back to the workplace. The moving trend has slowed but is anticipated to continue in 2022.

Home space now means something more
During the first wave of Covid-19, many employers closed their offices, forcing employees to work from home full-time. Home and personal space, including living rooms, kitchens and bedrooms, now became workspaces and a place for online schoolwork. For many spending time at home around the clock, it became untenable living in a small space. It affected stress levels and sleep. The pandemic has also introduced new reasons for people to rethink their city living situation, including constant noise, lack of natural light, close confines and high-traffic elevators, driving many to consider leaving urban areas. The once attractive aspects of a bustling city, including proximity to the office, friends and restaurants, came into question.

Seeking housing affordability
Housing affordability has long been a factor — even prior to the pandemic — as buyers search for larger, less expensive homes. The Toronto area has now become the priciest market in Canada, beating Vancouver, while Miami is the most expensive housing market in the U.S. As many employers closed offices indefinitely, many employees lost the incentive to remain in cities, paying higher prices for homes in urban centres.

Most residents who left large cities for less-dense cities or towns were looking for a detached or semi-detached house – the sector with the biggest increase in demand. The furthest away from the city center to rural areas or smaller communities became the hottest areas, with houses costing a fraction of a similar property in a large city. In Canada, North Bay and St. John’s saw some of the biggest increases in the number of home sales year-over-year from 2020 to 2021, with Ontario seeing the highest price increase across single-detached homes in the country. Sales of existing single-family homes increased year-over-year across the U.S. These factors are contributing to a spike in home prices and the volume of home sales in markets outside of the city, bringing more competition than usual to these areas.

Historically low mortgage rates in North America had home buyers eager to take advantage of inexpensive loans. The average home buyer could afford more home than they could in previous years, with these lower rates. The Bank of Canada and the Federal Reserve both maintained their benchmark rate at rock-bottom levels until March 2022, the first rate increase since 2018, and both are projecting further rate hikes in 2022. The average 30-year fixed rate mortgage average in the United States is on the rise and numerous major Canadian banks have been raising fixed mortgage rates in recent months.

The value of outdoor living space
Many residents are realizing the importance of outdoor living space. Having an opportunity to let kids run around outside without worry, having a picnic lunch with your family or taking an afternoon dog walk have become priorities. The pandemic has changed our relationship with the outdoors. While bedrooms and living spaces have become offices, green spaces and local parks have become a solace for many.

Creating a better work-life balance
Many are reassessing how they want to spend their time after having months to reflect during pandemic lockdowns. Pandemic restrictions brought busy lives to a standstill and forced many to embrace slower, less scheduled lives.

Many want a more harmonious relationship between work and personal life. Remote work can help to balance these two worlds. Home buyers are on a quest for a quieter, more connected lifestyle, and this has certainly been a factor in shaping the real estate market, alongside other financial elements of home buying.

A potential silver lining of the pandemic is the chance for a fresh perspective, along with a greater acceptance of remote work.

The shift we are experiencing will last beyond health restrictions. The pandemic changed not just how we live, but where we live. Home buyers are looking for the whole package: larger homes, desirable amenities, access to the outdoors, walkability and affordability.