There has been lots of media coverage about the rise in housing prices across the United States starting in 2020 and continuing through 2022, when COVID restrictions were widespread. The article linked below reports that the rise in prices was unprecedented.
Two researchers at Harvard’s Joint Center for Housing Studies were interested in whether the price rise was evenly distributed across the country. Peyton Whitney and Alexander Hermann investigated the rise in house values in smaller centers (under 1,000,000 population) and rural areas as well as larger urban areas.
Housing prices have historically been higher and risen faster in dense urban centres. Whitney and Hermann found that this trend did not continue during the COVID restriction phase. Instead, the biggest rises in house prices took place in rural areas and smaller centres1. Data from 2023 suggests that the historic pattern resumed, with prices once again rising more in the denser urban areas.
Some other research has suggested that the rise in rural housing prices is connected with working from home2. Whitney and Hermann identify some additional factors that could be linked with the rapid increase in house prices in rural areas and small centres. One example is unexpected household savings, which gave more households the capital they needed to make a down payment. The savings are thought to come from staying at, and working from, home and the temporary break in repaying post-secondary education loans.
Why does this research matter?
Whitney and Hermann argue that the substantial rise in house prices in rural areas could have negative consequences, especially for people with lower incomes in rural areas and small centres. This argument makes a lot of sense, especially as there weren’t a lot of new homes being built when all the home buying was going on.
Although not mentioned specifically, it seems likely that renters would be the group most affected, since renters on average have lower incomes and less wealth than homeowners. The consequences could be immediate, or show up later. Here are a few:
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- having difficulty finding an affordable place to live.
- experiencing unprecedented rent increases in a red hot market.
- being displaced in order to make room for new buyers with more cash/income to spend.
The linked article is intended for US audiences, but the report’s data and analysis suggest issues for investigation in other jurisdictions.
The findings are posted at Harvard’s Joint Center for Housing Studies. Here is a link to the summary report: Rural Areas Saw Disproportionate Home Price Growth During the Pandemic and to the research study: The Geography of Pandemic-Era Home Price Trends and the Implications for Affordability
Footnotes
- To be clear, the article is not reporting that house prices in rural areas surpassed those in dense urban areas. The researchers report that the rate of growth in prices was highest in rural areas and small centres
- References to research about the impacts of working from home are included in the report linked below.
