2020 has been a year like no other. Although an end may be in sight for COVID-19, its impact will shape the real estate industry for a long time to come. Here are four trends that show how the pandemic, changing work habits, and shifting demographics are creating new opportunities for Realtors® in Minnesota and across the country.
1. Moving to a retirement paradise (before retiring)
After workers were untethered from offices and daily commutes in mid-March, many started thinking about where they’d like to live if distance no longer mattered. For older employees, the allure of retirement playgrounds catalyzed moves they wouldn’t have considered for years. From sun-soaked villas in Arizona to the cozy confines of lakeshore cabins in Minnesota, workers began a quiet exodus.
For Dave Reski, an empty nester, telecommuting meant he and his wife could escape to a new home on Boot Lake, a Minnesotan fishing paradise more than 200 miles north of his employer’s headquarters in St. Paul. Reski represents the vanguard of a growing trend, according to T.J. Simon, founding partner of Wolff and Simon Real Estate in neighboring Park Rapids.
“We’re seeing a wave of clients choosing to live, work, and eventually retire in a place where they would normally just recreate,” said Simon. “Telecommuting, accelerated by the pandemic, has really opened that up.”
The cost of living and more affordable housing is a factor in some moves, too. Lawrence Yun, chief economist of the National Association of Realtors® (NAR), told CNBC that retirees—and those nearing retirement—are leaving expensive coastal enclaves for more reasonably-priced locales across the country. Relative affordability is one factor bringing new arrivals to the Minneapolis area.
“A lot of empty nesters and older residents who move to the Twin Cities are downsizing and simplifying. They want to walk to the grocer, the post office, the restaurants, the park—every place they need and want to go. They don’t want to depend on cars,” said Leah Drury, Realtor® with Lakes Sotheby’s International Realty office in Minneapolis. She added that many of them are relocating to be closer to grown children and grandchildren.
“One of my clients is a grandfather moving here from Seattle,” Drury said. “Now he’ll be close to family and be able to work from home. We’re seeing a lot of this from within Minnesota, too.”
2. Multigenerational home sales increase as buyers seek safe havens for aging parents
Adult children across the country are actively encouraging their aging parents to move nearby, or increasingly, move into the same dwelling together. The Wall Street Journal reports that demand is growing for larger homes that can comfortably accommodate up to three generations. The extraordinary rate of pandemic-related illness and death in assisted living facilities and independent living centers has accelerated the trend. Purchases of multigenerational homes made up 15% of transactions in 2020, up 4% from a year earlier. Lennar Corporation, a nationwide homebuilder, anticipates increasing its line of multigenerational homes by 20% next year. Builders of backyard “grandma” dwellings have also seen sales spike as Gen Xers and Millennials embrace alternatives to assisted living for their aging parents.
3. Pandemic disrupts supply of major home appliances
Frozen dinners everywhere and not a fridge in sight
New homeowners might want to lay in a hefty supply of ice for their coolers and find creative ways to do their laundry along with the dishes in the sink. In another pandemic-driven trend, there’s a nationwide shortage of refrigerators, washers and dryers, and dishwashers.
It started back in March when panicked consumers hoarded food and bought extra freezers to store it all. At the same time, factories, anticipating slack demand due to wide unemployment, scaled back production of freezers, refrigerators, and most major home appliances. National Public Radio (NPR) reported that shipments of these items sank 7% by June. Concurrently, the housing market began heating up, and demand for appliances skyrocketed.
Backlogs have persisted to the end of 2020, and manufacturers project they won’t be able to meet demand until sometime next year.
4. Population of HOA communities is swelling
For a growing number of Americans, home sweet home is in a community maintained by a homeowner’s association (HOA). As budget-strapped state and local governments cut back on essential services like road maintenance and trash removal, HOAs are picking up the slack.
In Minnesota, there are 7,725 HOAs, accounting for 37.3% of all owner-occupied homes in the state. Well over a million Minnesotans live in HOA communities, making up 27.3% of the state’s population. The total value of HOA real estate in Minnesota approaches $129 billion.
A satisfaction survey by FCAR said that 70% of HOA nationwide residents rate life in their communities as “very good” or “good,” and appreciate that their associations maintain and repair common property areas like pools, elevators, streets, and other infrastructure.
You can learn more about all of these trends by reading these articles from NAR’s Realtor® Magazine:
Remote Workers May Seek Retirement Housing Early
More Buyers Want Space for Mom and Dad
Home Buyers Face Another Shortage: Appliances
Record Number of Homeowners Live in HOA Communities
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