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Research Publication

Housing Insights: COVID-19 Led First-Time Homebuyers to Move Away from Highly Dense City Centers

March 30, 2021
Rebecca Meeker
Rebecca Meeker

Financial Economist, Economic & Strategic Research Group

Nuno Mota Headshot
Nuno Mota

Economist, Economic & Strategic Research Group

As the COVID-19 pandemic swept across the country in 2020, it touched nearly every aspect of the U.S. economy. In the housing market, new listings, home sales, and residential construction all plummeted in the spring of 2020. In the following months, however, the housing market proved resilient, with home sales and new construction reaching decade highs amid historically low mortgage rates.

During this time, there was widespread anecdotal evidence that the pandemic had shifted consumer demand from core city centers to lower-density markets, like the suburbs.1 Fannie Mae's Q3 2020 National Housing Survey® (NHS) showed that on a national level, most households reported they were living where they wanted, with no noticeable uptick in people responding that they were planning to move soon.2 However, when looking at the population of people applying for a mortgage, there was a clear shift in behavior. While low mortgage rates helped drive demand for housing in 2020, our analysis addresses the relative shifts of composition within this increase in demand. We used proprietary Desktop Underwriter® (DU®) data, showing purchase mortgage applications for primary residences, to examine how the COVID-19 pandemic impacted housing demand, including the make-up of potential homebuyers, and assessed possible preference shifts evident in some of the largest markets in the country.

On a national level, we found that there was a significant movement from high-density zip codes to lower-density zip codes (see Figure 1), as well as a significant increase in the share of moves across metro areas (see Figure 2). While there had been a slight increase in the high- to lower-density move share on a year-over-year basis in the first few months of 2020, the pandemic appears to have accelerated the trend. Further, we showed that if, instead of classifying zip codes by population density, we do so by the predominant property type (i.e., single-family or multifamily) for housing units within the zip code or by the primary means of commuting to work (e.g., by car or other form of transportation), a similar pattern emerged. Namely, there was a pronounced increase in the share of moves from predominantly multifamily zip codes to predominantly single-family zip codes, as well as an increase in moves away from zip codes where workers primarily commute by a means other than driving a car to zip codes where driving to work is the norm.

We also highlighted how first-time homebuyers drove the increase in moves away from high-density zip codes (see Figure 3) and across metro areas (see Figure 4) more so than repeat homebuyers or within-metro moves. It appears that the highest-cost, highest-density metros experienced the largest increases in shares of high- to low-density moves. New York and San Francisco are two such metropolitan areas. Both metros are high-housing-cost areas where renters were disproportionately likely to purchase a home in less-dense, cheaper areas of the country. We see this pattern as evidence that first-time homebuyers, especially younger Millennials, may have chosen to accelerate their moves from renting to owning as a result of the pandemic.

Lastly, it remains to be seen how much of this pattern of moving away from density will be sustained in the years to come, post-pandemic. To the extent that large metro areas maintain the amenity values that drew people to them in the first place, it’s reasonable to expect people to flock back to these areas after the pandemic subsides. On the other hand, the pandemic experience of working remotely in a lower-housing-cost area likely appealed to many workers and may be something they wish to maintain, thereby attenuating a possible "return to the cities" migration phenomenon.

To find out more and delve deeper into the shifts in mortgage applications evident in 2020, we encourage you to read our latest white paper: "COVID-19's Impact on Housing Demand in High-Density Areas – Evidence from Purchase Mortgage Applications."

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic and Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

1 Whitaker, 2021, has 16 examples of such articles, see:

2 See