Covid has nothing to do with Millennials fleeing cities for suburbs, the trend has been there for decades, explains the expert
If you thought that the growing trend of remote work and soaring unemployment rate in the US in the wake of the Covid-induced economic slowdown have been forcing more and more Millennials to relocate to suburbs from the cities, thus making a dent on the country’s real estate sector, you could be wrong. The property market is, in fact, witnessing a V-shaped recovery, says Logan Mohtashami.
“The housing market in the US, in particular, is the most outperforming economic sector in the world, as per the latest economic data. This trend really shows that people do believe in economic models, and it’s just based on two real principles—demographics and mortgage rates,” the leading financial analyst told Real Vision Finance podcast.
Logan clearly dismissed the theory that the growing unemployment rate in the US has made a dent on the real estate sector amid Covid.
“So when that first-time homebuyer or first-time homeowner actually is ready to get a bigger house, they move away from the cities”
“They say how can Americans buy homes if 20 to 30 million Americans are out of work. This is confusing as they have neglected the 133 million people that were always working.
“So, if you’re looking as unemployment or jobs being the primary factor for housing, the original thought was a failed concept right away because of the 20 to 30 million jobs that were lost, a lot of these were tied to wages that would be basically people who are renters and not home buyers,” he argued.
According to the financial expert, it was actually the initial fear of the virus that had brought down the property rates in the first quarter of this fiscal. “But we are getting back to pre-Covid levels fast,” he said, citing economic data.
On the demographics of investors, Logan said the first-time homebuyers in the US are around 33 years old. He also went on to dispel the popular theory doing the rounds that these homebuyers are increasingly fleeing the cities for suburbs in the wake of Covid-impacted economy. In fact, he said, the trend was there for decades, and it had nothing to do with Covid.
“This has been happening for years you know when people they rent, they date, they get married, they have kids, they don’t live in apartments, they don’t live in cities, they live in bigger homes this is what we do in America. We’ve been doing this for decades.
“So when that first-time homebuyer or first-time homeowner actually is ready to get a bigger house, they move away from the cities. Now, people are trying to make this a very sexy story that everybody’s leaving the cities and they’re all going to the suburbs,” he explained.
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