MENLO PARK and SANTA CLARA, Calif. –
Understandably, dealerships and finance companies are currently at the point of the month when they’re likely focused on sustaining sales momentum generated during the first half of the sales period or looking to rebound before the calendar turns the page.
However, two surveys originating from the real-estate world might provide some optimism about the longer-term prospects for vehicle deliveries and contract originations. The separate projects showed notable consumer sentiment about moving out of cities and into suburbs or even more remote locations where owning at least one vehicle would be quite beneficial, if not significantly necessary.
Quicken, makers of personal finance software, on Wednesday shared results from a recent survey of more than 1,000 millennials renting apartments in urban areas. While 93% of millennials have stayed in their city of residence since the start of the pandemic, more than one-third (37%) are considering moving away in the next year.
And the COVID-19 pandemic is influencing the U.S. housing market both in terms of where people are searching and what they are searching for, according to realtor.com’s quarterly Cross Market Demand Report, which measures search data to provide insight into where shoppers are looking for their next home.
After an initial shift in search habits at the onset of the coronavirus pandemic in the U.S., realtor.com indicated home shoppers looking outside their current metro area for homes have surpassed pre-COVID levels, and more are increasingly setting their sights on the suburbs. During the second quarter, 51% of views from urban residents of the nation’s 100 largest metros went to suburban properties in their metros, an all-time high since realtor.com began tracking metro level search data in 2017.
Quicken reported that responses in its survey indicate that millennials wouldn’t move all at once, but in waves during the next 12 months, suggesting a gradual exodus. Here’s a breakdown of when they’re considering leaving:
— Within six months: 16%
— Between six months and one year: 21%
Quicken discovered fewer than half (47%) of millennials indicated a definitive plan to stay in their cities long term and 16% weren’t sure. Additionally, 34% of millennials are now working remotely, offering more flexibility in where they choose to live.
“Millennials living in cities have been spending a substantial amount of their income on rent — the rule of thumb suggesting one-third of a person’s pre-tax income be spent on housing isn’t always realistic in highly sought-after urban locations,” Quicken vice president of marketing and sales Linda Itskovitz said in a news release. “COVID-19 is expected to have a lasting financial effect on this generation, and we’re starting to see that as millennials reconsider their living situations.”
Meanwhile, realtor.com said its search data analysis reinforces the findings of a recent realtor.com and Harris X consumer survey of 2,000 active home shoppers, which indicated that home purchase decisions are being influenced by consumers’ ability to work remotely, desire for more space and their willingness to commute longer to get what they want in a home.
And to commute, those individuals likely would need a vehicle.
“We see lingering effects of the coronavirus on shopping behavior and preferences. In the Northeast, especially, people are now as likely as before the pandemic to be looking for a home in a market that’s not where they currently live. However, those looking elsewhere are much more likely to be looking in smaller, nearby markets,” realtor.com chief economist Danielle Hale said in a news release distributed this week.
“With remote work more common and accepted, it seems that people are looking to locate further from the office either to enjoy more space at a better price, or get closer to nature in the mountains or at the beach. At this point, they are not venturing too far away,” Hale continued.
Following the recession in 2008, Quicken recapped that suburban growth slowed while droves of millennials just graduating from college moved to big cities where jobs were concentrated. Many considered millennials the urban generation and questioned if they’d ever settle into suburbs.
However, Quicken pointed out the trend started to reverse in 2017 when some cities reported hitting “peak millennial,” and in 2018, census data for city population growth found that suburban growth outpaced city growth for the second straight year.
Now, as the pandemic has changed nearly every aspect of our daily lives, Quicken said millennials are taking a step back to assess what they want from a living space — many seeking out financial security, more space and physical safety.
“Lease terms can play a significant role in decision-making. As we see annual leases expire, millennials will have the opportunity to revisit their financial commitments and determine their next move,” Itskovitz said.
Which might include taking delivery at your dealership and signing a retail installment contract booked through your finance company.