The COVID-19 pandemic has been blamed (or credited, depending on your perspective) for accelerating a number of key trends that were already in evidence prior to the shutdown of American society earlier this year. Perhaps the most noteworthy is the shift of consumer purchase activity to the internet. E-commerce, which has been gaining share at about 1% annually for the past several years, has exploded, with some suggesting it could account for 30% or more of home furnishings sales by the end of this year.
On the flip side, there have been suggestions the pandemic has reversed trends that had been building over the past several years. The most talked about is a seeming exodus of consumers from urban centers to the suburbs.
If true, this would reverse a trend that’s been building the past several years of people, and particularly Millennials, settling into cities and inner-ring suburbs to enjoy their culinary and cultural benefits. Certainly at present some of those benefits are less accessible than a year ago, and some may remain so at least for some months to come.
There have been a growing number of stories of late positing this shift. The Wall Street Journal, New York Times, USA Today, The Atlantic and a host of others have all written of an urban exodus, citing drivers ranging from increases in remote work to consumers’ desire to escape congestion and the potential of a future outbreak in high-density urban living spaces.
Outside of New York and San Francisco, the evidence of this shift is at present inconclusive. A recent study by Zillow showed comparable, while significantly increased, levels of home selling activity in both urban and suburban markets. The one potentially supportive data point in the Zillow study was in rental activity, where urban ZIP codes saw a larger decline in activity than suburban areas when compared with pre-pandemic levels.
Overall, the housing market appears to be heating up significantly with the National Assn. of Realtors reporting a nearly 25% jump in July existing home sales over June and an 8.7% increase over last year.
NAR’s chief economist Lawrence Yun described the housing market as “now booming” and noted, “With the sizable shift in remote work, current homeowners are looking for larger homes, and this will lead to a secondary level of demand even into 2021.”
It’s worth noting that national median home prices rose to more than $300,000 for the first time ever, a development that could reflect a move toward larger homes. If so this would reflect a shift from the downsizing trend we’ve seen in recent years.
For the furniture industry this could mean a reversing the shift toward smaller scale, apartment-focused furniture evident in many collections and prevalent in the e-commerce space. When coupled with the renewed focus on entertaining at home, it seems likely we could see a resurgence of interest in products — think oversized sectionals — that support gathering of family and friends.
It’s too soon to get an accurate read on how this will shake out. But these are developments that bear watching.