The coronavirus pandemic has many Americans rethinking the kind of lifestyle they want. Apartment living in central, densely populated urban areas is losing its appeal as residents are subject to building restrictions and risk coming into contact with people infected by the virus.
Polling data suggests that nearly one-third of Americans are considering a move to less populous areas, and in some regions, they are already relocating. Between March 15 and April 28, moves from New York City to Connecticut, for instance, jumped 74% compared to the previous year, and the Hamptons have already been flooded with New Yorkers fleeing the city.
The desire for space and privacy—and for control over who comes and goes from one’s home—is stronger than ever, making single-family homes an especially smart investment now.
“Single-family homes in the post-Covid era are a more flexible kind of living arrangement,” said Janet Feinberg Schindler, a broker with Sotheby’s International Realty in San Francisco. “There are no board members imposing rules on how you live. Outdoor space can be enjoyed freely with your family, and no one is there to enforce social distancing. If you want to sell it, or rent it, you only need to make that decision yourself without consulting anyone.”
Single-family homes in suburbs just outside major cities offer particularly good opportunities to make a strong return on investment.
“The number of single-family homes being rented is off the charts,” especially at the high end, said Candace Adams, CEO & President of Berkshire Hathaway HomeServices New York, New England and Westchester Properties. “In Connecticut, rentals for over $5,000 a month have increased by 33% year over year, and by 59% for rentals over $8,000 a month.”
On the West Coast, too, there has been a surge in interest in single-family rentals, as wealthy Americans test-drive a more suburban lifestyle amid the Covid-19 crisis.
“I just sold two homes to investors that will lease for $15,000 to $16,000 a month,” said James Harris, a broker with The Agency in Los Angeles. “It’s so cheap to borrow that you’re making 10% on your money a year. It’s a very good return on investment, and I think over the next five to seven years, you’re going to see capital appreciation.”
However, he adds, apartment living isn’t losing its luster entirely. High-end, full-service condos that go the extra mile to protect residents will still appeal to buyers.
“People love full-service living, and there will be new measures put into place by these developments for those people, I’m sure,” Mr. Harris said.
The Appeal of Single-Family Properties Post-Covid
Before the outbreak of coronavirus, demand for single-family homes was already high, and some real estate experts expect that the current pause on much of the buying and selling in the U.S. will lead to pent-up demand post-Covid.
Investing in single-family homes not just on the outskirts of cities but within them could lead to strong returns.
“From an investment standpoint, I have always been a firm believer in the value and desirability of a single-family home, particularly in a city as dense as San Francisco, where the amount of land is limited, and new homes cannot be built,” Ms. Feinberg Schindler said.
Given that many boards and homeowners’ associations in apartment buildings are restricting visitors and services, and curtailing buyers’ ability to see units for sale, the greater autonomy provided by single-family home living will become more of a draw.
In the wake of the pandemic, urban-dwelling millennials are expected to start looking for more square footage in the suburbs but are more likely to rent than to buy, presenting opportunities for investors to earn rental income.
“Millennials want to have more space, but they don’t want the responsibility of owning,” Ms. Adams said. “Uncertainty makes people more apt to rent, not knowing where the job market might land them. So it’s a fabulous time to move money into real estate as an investment, as opposed to financial markets.”
South Florida could be a promising market for investors, as people from the Northeast head south seeking more space and waterfront living. Florida’s lack of income tax and lower property taxes are also a major draw for buyers from high tax states like New York, New Jersey, and Connecticut.
“In the upcoming season, we’re expecting that independent homes with pools will get more attention,” said Daniela Bonetti, a broker with ONE Sotheby’s International Realty in Miami Beach. “Earlier this year, the price of single-family home rentals increased by a lot, especially waterfront homes. Even if it’s expensive as an investment, it’s worthwhile, because [owners] do get a lot of rental money per month, and we don’t think prices will go down.”
In Palm Beach, too, demand is higher for houses than for condos, particularly from buyers with young families seeking private beaches and more space for their children.
“There are a number of New Yorkers who are working away from the city now, and Covid is causing a resurgence of activity here,” said Ashley Copeland, a broker with Brown Harris Stevens in Palm Beach. “Supply and demand always makes this island a safe investment because our inventory is on the low side, and now we’re having unusual demand here.”
What Features to Look for in Single-Family Homes
Investors should consider which property features will be especially in demand, given the way the coronavirus pandemic has altered Americans’ ways of living and working. Outdoor space, for instance, will be a more appealing feature than ever, and having a dedicated office for working from home will be a top priority.
“Having private outdoor space is going to be perceived as a greater luxury, whether it be in the form of a deck off an apartment or a garden associated with a house,” Ms. Feinberg Schindler said. “Personal outdoor space enables one the peace of mind to know someone else won’t be violating social distancing, as well as the comfort of knowing that whatever you may touch is your own and won’t be contaminated by the outside world.”
Investors should also look closely at properties in gated communities, where the sense of greater security will be a draw to buyers.
“When we start talking about the high end, buyers are really going to start looking for gated communities,” Mr. Harris said. “People are also very focused on land, and they want privacy and swimming pools. They’re going to change their lifestyles, with a lot more working from home, and if this [pandemic] were to come back, people want to feel as though they are prepared and their home can be their sanctuary.”
Content provided by realtor.com. Original article can be found here.
If you're an investor interested in purchasing more single-family rental homes or a property owner who would like to know what your single-family home may rent for, please contact the experts at Sweyer Property Management today for a no-obligation rental analysis.