There’s been a lot of talk about how Covid has impacted community growth and economics. There’s even a cogent argument that much of the housing affordability crisis, at least in some places, has been due to Covid. Utah’s rapidly rising costs for housing began prior to the covid outbreak, but it has likely exacerbated it. Here’s a viewpoint on how covid has impacted housing costs from last week’s issue oh The Economist:
How the pandemic has changed American homebuyers’ preferences
Since March 2020, American house prices have risen by 33%. But the increase has not been evenly spread. The covid-19 pandemic, and the lockdowns and restrictions it inspired, have changed where homebuyers want to live.
In Florida’s Collier County, a haven for golfing pensioners, house prices were flat in the two years to February 2020. Since then, they have risen by 57%.
Warm-weather areas across the American south have seen some of the biggest increases in house prices.
Take Williamson County, Texas. The area ranges from the fringes of bustling Austin to its northern exurbs, and is home to Dell, a computer firm. House prices have grown by 75% in the past two years, compared with just 5% growth during the previous two—the fastest acceleration in America.
Other suburban and exurban counties have also seen big rises, especially ones with good weather. These areas often contain affordable housing and industries friendly to remote work.
To detect these patterns, we used a monthly home-price index from Zillow, a website, for 2,563 of America’s 3,006 counties since 2018. We then built a statistical model to find what places with similar recent price-growth rates have in common.
Covid itself has hurt the market mainly in hard-hit areas. In the 100 counties with the highest official death rates from covid, price changes were four percentage points lower than you would otherwise expect.
Lifestyle changes had bigger effects. Because city dwellers could not meet face-to-face, they dispersed, mostly to the suburbs. Holding other factors constant, price changes were 10-15 percentage points greater in middling-density counties like Williamson than in big cities or rural areas.
Covid has also led people to spend more time outdoors. In turn, buyers have bid up homes in areas where it seldom rains, summers are balmy or, like Collier, winters are mild. Weather explains 16 percentage points of the gap in price gains between sunny California and frigid Minnesota.
A final factor is remote labour. Before the pandemic, geographic inequality had been rising: areas that were already expensive saw the biggest price gains. In counties that rely on industries, like construction, in which people have to turn up to work, this trend has continued since 2020.
However, the pattern has reversed in areas dominated by industries amenable to remote work, such as finance. Since covid emerged, price gains have been large where housing