The COVID-19 pandemic of March 2020 caused many people to leave densely-packed urban cores for more spacious suburban and rural areas. These “Zoom Towns” were smaller, with more affordable housing than larger cities, leading to a housing boom – and higher prices. However, a recent CBRE report indicated that aggressive Federal Reserve rate hikes combined with slowing home price appreciation could signal the end of this Zoom Town housing boom.
Data from Freddie Mac showed much of the decline in these markets was situated in Western U.S., as households left expensive markets like California for less expensive ones such as Arizona or Idaho during remote work periods between 2020-2021. Unfortunately affordability has decreased since then due to rising house prices; Reno NV’s mortgage-to payment income ratio is close to twice what it was before COVID hit while Phoenix and Las Vegas are also showing signs of stress on affordability levels compared with Midwest/Northeast where higher mortgage rates have been responsible for erosion instead..
This decline isn’t just limited to the West either; Southeast market gains may be eroded by increasing mortgage rates coupled with slower job growth which will likely prevent another ‘Great Covid Migration’ from occurring again soon – presaging a slower recovery period for once booming Zoom Towns according CBRE’s report authors .
