A new Realtor.com analysis shows Americans from blue states are looking for homes in red states, and that could impact upcoming elections. Yahoo Finance’s Alexis Christoforous and Brian Sozzi speak with Danielle Hale, Chief Economist at Realtor.com.
ALEXIS CHRISTOFOROUS: We may be on the verge of a major population shift from blue states to red states. A brand new analysis from Realtor.com shows buyers in some blue states, like New York and California, have been searching for homes in places like Florida, Wisconsin, Michigan and Pennsylvania. Here to talk about it is Danielle Hale, Chief Economist at Realtor.com. So Danielle, we've been seeing this trend now throughout this pandemic, why is this? Is this just people trying to flee cities and go to areas with more space?
DANIELLE HALE: Yeah, so the trend has certainly gotten a lot more attention during the pandemic, but it didn't start with the pandemic. It was ongoing beforehand. And in fact, this analysis goes all the way back to 2017 and all the way up to now to look at our data to find that we are seeing people moving from these dense urban areas that have tended to vote Democratic into suburban and rural areas that have tended to vote Republican. The reasons we think are looking for those moves is extra space and affordability, and people wanted affordability even before the pandemic. Now, they want it even more, because they want extra space.
BRIAN SOZZI: Would those moves influence this election, or is this more of a forward looking indicator?
DANIELLE HALE: You know, that's something that we'll see in the next month or so. They certainly could have an impact on this election, and, you know, when the votes are counted, that's when we'll find out. And what we're finding is that the trend shows that it could lead to more blue state voters, or formerly blue state voters, in red states. You know, but what does that mean?
Do people take their political views with them? Are they going to continue to be blue voters, or is there something about living in the suburbs and rural areas that, you know, causes people to think differently and maybe shift their political opinions? That we can't really know, but something we'll certainly look to after the election is completed.
ALEXIS CHRISTOFOROUS: So this analysis from Realtor.com is looking at searches. People in these blue states are searching for homes in these red states, but is that actually turning into real purchases, or are people just looking at this time?
DANIELLE HALE: Yeah, that's right. So historically, these searches have been a very good indicator of migration patterns. So for instance, we've looked at California in particular, and folks leaving California were doing searches in nearby Western states that are much more affordable like Idaho, Nevada, Arizona, and we found that actual migration patterns track very closely to those search patterns. In this case, we just looked at the home search patterns. We haven't looked at the migration patterns, but that's something that we can do further analysis on to see if that continues to hold up.
BRIAN SOZZI: Anything in the data that would suggest these are permanent migrations, or once the pandemic is over people might migrate back to where they lived?
DANIELLE HALE: That's a great question. So these are home buyers, so they're certainly thinking longer term than, say renters who are migrating, typically, because you're going to buy a home you want to buy for a couple of years in order for it to make financial sense to make that transaction.
Additionally, this is a trend that's been accelerated because of the pandemic, but it was certainly ongoing before the pandemic. So as younger buyers, ages where they're settling down, forming families, starting households, they're looking for extra space, and that has caused them to look to the suburbs and rural areas where homes are more affordable, and we expect that once they're there that they will stay at least for a few years.
ALEXIS CHRISTOFOROUS: I don't have to tell you that real estate is cyclical, and we've certainly lived through downturns before, and maybe not quite like this, and there has been a lot of talk about the demise of the big city like New York City, that it will be able to bounce back and be what it was pre-pandemic. What are your thoughts on that? I mean, I know Jerry Seinfeld's out with a book talking about New York City and singing its praises and saying we are going to come back from all of this. What's your take having a bird's eye view of the real estate industry?
DANIELLE HALE: I think it's too early to say that New York City is over. It's certainly true that people are looking for more space and affordability and finding it in the suburbs, but the reason that they're looking in the suburbs is because they can't find what they want closer. And even the suburban areas, you know, when we do our hottest zip codes analysis, the suburban areas that are doing well are areas that are typically in close proximity to cities, because job centers are in cities, culture is in cities, nightlife is in cities, there are a lot of amenities that draw people to cities.
The pandemic has sort of freed up the way people think about getting to and from work, because since many of us are working from home, if not indefinitely, at least for the foreseeable future, and that has led to a slight shift in preferences. But I don't think that people will move too far away from the cities, and additionally, if a lot of people start to shift out of the cities, that could potentially make prices more attractive.
And I think that will certainly help bring people in, because there is still a lot to be said for cities and at least some of, you know, the culture shift that we've seen right now as a result of the pandemic, I don't expect that to be permanent. That's certainly going to be temporary.
ALEXIS CHRISTOFOROUS: Yeah, well, I agree with that. Danielle Hale, Realtor.com, I'm not given up on the city just yet. Thanks for being with us.
DANIELLE HALE: Of course.