Demand Trends Are Changing in Residential Real Estate

Cities are where the action is, and where most young people want to live. Right?

For the last few decades, conventional wisdom has told us that urban neighborhoods were the most desirable places to live and work. Cities around the country have pushed major urban renewal programs, and real estate prices in places such as Brooklyn, Chicago, and San Francisco have skyrocketed.

Tech innovations like the “sharing economy” and on-demand transportation reinforced this narrative. If cities have the best paying jobs, the best amenities, and all the excitement, then who would want to live anywhere else?

Recent developments are calling this story into question. After months of lockdown, it’s starting to look like people want more space, and that has big implications for real estate.

New data indicates a meaningful shift is underway from big cities into smaller cities and suburbs. It could be that the pandemic is causing a big change in consumer preferences. It’s also possible that millennials, now grown up, want similar things to what their parents wanted.

People move to the suburbs for clean, quiet, safe neighborhoods with quality schools. They might not be as exciting, but they’re great places to raise a family with a good quality of life.

Long commutes used to be one of the biggest drawbacks of the suburbs, and the pandemic has changed that too. An extended period of working from home has made remote work normal. It’s more possible than ever before to live where you want, regardless of where you work.

Residential trends are something Alliance monitors closely for evaluating commercial real estate opportunities. People tend to spend money near home, so wherever people move, businesses tend to thrive. More population in the suburbs will lead to more demand at local businesses, and more demand for commercial real estate to serve those customers.

Because of Alliance’s strong fundamentals, forward-thinking approach to investing, we are very well positioned to monetize this trend.

Business always comes down to supply and demand. It’s too early to say for sure, but it really looks like demand for real estate may be rising in exactly the places where we like to invest. We’ll be keeping a very close eye on this developing trend.

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