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Sean Black, Co-Founder and CEO of Knock joins Yahoo Finance Live to discuss homebuying trends seen during the pandemic.
KRISTIN MYERS: I want to pivot now to talk about real estate because many folks are tired of staring at the same four walls of their apartments during their pandemic. I was definitely one of them. And according to our next guest, they moved to more suburban and rural areas within their state.
Now, we have Sean Black, co-founder and CEO of the real estate tech company Knock joining us now. So Sean, you guys have data that shows that Gen Z'ers and Millennials moved to more suburban, rural areas and purchased homes there. How long do you think that trend is going to last now that we're moving the pandemic into our rear-view mirror? Cities are opening. And offices are also beginning to reopen again.
SEAN BLACK: Yeah. Thanks for having me. I think first up, the punch line of a survey we did was that, despite the buzz and the reports to the contrary, most people actually did not move cross-country. In those who bought houses last year, almost 60% moved to a new city within their existing state.
And in terms of that trend, we think that's likely to continue into the mid to interim term. In that survey, that same survey, 70% of homeowners or people planning to purchase a home in the next year said they would like to relocate to a new area.
And as you said, 58% of those were Millennials and Gen Z. And rather than moving across the country, they're moving to less-populated areas, suburban areas, and smaller cities. In fact, overwhelmingly, 40% moving to cities with fewer than 10,000 people, so taking the social distancing to an extreme.
ALEXIS CHRISTOFOUROS: Sean, one thing we saw over this past year in this very trying time is that we all sort of re-evaluated what home means to us and what we're looking for from our home. What are some of the trends you saw in terms of priorities, what matters most now as people head out and think about moving or buying that first time home?
SEAN BLACK: Yeah. I think overwhelmingly, the reason people moved is to be close to family. And that, I think, correlates really closely with the fact that most moved within the state they live in, just within a different city in that state and in a smaller city, a more intimate setting, a safer setting, a better place to raise a family. But I think overwhelmingly, people wanted to be near their families.
KRISTIN MYERS: Will this depress home prices in the cities, do you think, especially as some folks that previously couldn't afford-- and we've seen this in New York-- previously couldn't afford to live in Manhattan, for example, have decided to move in and snap up some of that inventory?
SEAN BLACK: Yeah. It's a really good question. I think we-- Knock started five years ago under the hypothesis that there was a huge migration over the next 30 years of people moving out of big cities like New York and San Francisco and into smaller cities like Raleigh and Charlotte and Austin.
And we continue to see that trend pretty strongly. But part of that trend also had a group of people who were moving from the exurbs and the suburbs back into cities. Their parents had taken them out to the suburbs and exurbs 30 years ago, their families. And they were moving back in, seeking culture and food and nightlife but not wanting to pay New York or San Francisco prices.
So you definitely see some of these secondary cities going up in house values and housing inventory being light in those markets, being challenging. So I think, does it help for anybody that wants to live in New York or San Francisco? Certainly, it does. I think it helps those who want to live in a big city pay a little less because I think overwhelmingly, or a little bit over the average, as you see in the rest of the country, people are leaving those larger cities a little bit more en masse.
ALEXIS CHRISTOFOUROS: I'm wondering, though, how sustainable this housing market boom is. I mean, at some point don't you say, OK, all those people who were looking to relocate have already done it, all those people looking to buy a home have done it, at least for now, and sort of the frenzy will start to die down? Do you see that starting to happen? And what might trip up the housing boom later in the year?
SEAN BLACK: Yeah. We don't, at Knock, see that happening. We wish there would be a little bit more inventory. We do see inventory easing. And I think, especially, four to six weeks ago when more people had access to the vaccine, and I think that made the sellers more comfortable having people in their homes and they themselves being more comfortable being in other's homes.
So I do think there was a huge amount of pent-up demand over the pandemic and not a lot of inventory. And so I do think this has a lot of runway to it, in so much as that a lot of people just couldn't find a home.
We have, at any given time right now, 70 to 100 buyers who are just trying to find a home. They're fully pre-approved to do what we call a Knock Home Swap. But they're challenged to find a home. We see more of them getting into homes. But there's a lot more demand than there is supply. And we don't see that easing up in the foreseeable future with rates staying low and the Fed promising to keep it that way for some time.
KRISTIN MYERS: Really quick, Sean, we talk a lot about where the demand is the highest for some of these moves. But I wanted to ask you about the flip side, where you didn't see this kind of movement happening.
SEAN BLACK: Yeah. I think you saw net outflows in big cities, again, like New York and San Francisco. I think you heard, clearly, based on this data, not nearly as much as the hype or the media would have portrayed. In the survey, only about 50% of home buyers moved outside of their state as opposed to buying within their state, either in their own city or a different city. So I do think there's some net outflows in the larger cities, New York and San Francisco in particular, that didn't benefit.