With more Americans able to work remotely, and broadband technology improved in areas with less population density, new data from Fannie Mae shows demand for housing in rural areas is on the rise.
From 2010-19, more than half of rural U.S. counties lost population, while only 24% of counties in metropolitan areas had lost residents. But Fannie Mae's new data suggests that those trends are being reversed.
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Previous Fannie Mae research showed that first-time homebuyers were moving out of more population dense regions into areas with less density. What Fannie Mae has observed has been that the largest cities have seen the largest population declines from their inner cores, while small cities have experienced minimal loss. This phenomena has been dubbed as a "donut effect."
"Although only a small share of urban residents relocated to rural areas during the pandemic, their influx represented a disproportionate increase in demand for housing in those regions. In fact, application activity for housing in rural and non-metropolitan areas rose 80% since the start of the pandemic," wrote Kevin Park an economist with the Economic & Strategic Research Group.
What Park noted was that as housing demand in both urban and rural areas increased after the pandemic began in 2020, housing sales in urban regions cooled in more recent years. However, rural home sales have remained steady despite high interest rates.
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The boom in rural housing sales were experienced in all sorts or areas, but most especially near diverse, institution-rich hubs and high employment agricultural areas.
"Recent technology leaps and changes in workplace culture instigated by the COVID-19 pandemic may help attract residents and reverse this depopulation of rural areas," Park wrote.
