Detroit area's remote workers seek bigger houses

 


For nearly a year, Malinda Mitchell and her family rented a 1,100-square-foot house in Wolverine Lake, saving money for a larger home after a couple of years.

Then the pandemic hit.

Working from home, Mitchell, a transaction coordinator for a real estate company, set up workspace wherever she could. Her two school-age children tried virtual learning in the same spare room, but that didn’t work out well during Zoom calls. 

“We’re all on top of each other,” Mitchell said.

Malinda Mitchell has plenty of room in the office of her new Walled Lake home. Metro Detroit homebuyers are looking for more space as they continue working from home.
Malinda Mitchell, who works for a real estate firm, recently bought a bigger home in Walled Lake.  
CLARENCE TABB JR., THE DETROIT NEWS

Mitchell and her husband, Kris, decided they couldn't wait another year to buy. They purchased a 2,500-square-foot, four-bedroom colonial in nearby Walled Lake so they could have more space.

“This home definitely is going to benefit us,” she said. “I do work from home, and I’ll have my own space. … That has definitely been a bonus.”

The Mitchells aren’t the only ones moving to larger homes, sometimes with additional rooms or more land to stretch out. It’s a trend seen across the country as people continue to work remotely and their children take online classes. Record-low mortgage rates have fueled the trend.

Jeanette Schneider, executive vice president of RE/MAX of Southeastern Michigan, has witnessed the transition.

“There’s a large demand for space to have those Zoom meetings, to have a quiet atmosphere to have those conversations,” she said. “If you add to the mix school-age children that are maybe learning virtually now and remotely as well, they have some of the same needs and concerns. We’re definitely seeing folks just maybe looking for a house that has an extra bedroom or a dedicated office space that can accommodate at least some of those needs that families are now facing.”

According to a study by real estate brokerage Redfin, sales of larger homes are up 21% nationwide from a year ago as people seek more space during the pandemic. The average minimum square footage of home users saved on Redfin’s website was 1,864 as of late August, up from 1,794 at the same point last year.

Its survey of more than 1,000 people who were planning to buy a home in the next year showed that a designated space to work and more outdoor or recreational space were desired features.

Meghan Precht and her family recently made the move from a 930-square-foot home in Berkley to a 1,742-square-foot house in Plymouth.

In their previous house, Precht and husband David Hardgrove, who both work for Quicken Loans, set up home offices in the dining room and basement respectively. Their 6-year-old son attended school remotely in the living room. And they had a baby girl in April amid stay-at-home orders.

"It was not realistic to be able to all fit," Precht said. "We talked to our Realtor about going ahead and pulling the trigger. ... We let her know that with everything going on, it's more of a push for us to go ahead and make this move."

Precht said in her new home, her office will be set up in the sunroom.

"It's more relaxed," she said. "It doesn't feel as strenuous to be at home like it did before."

Malinda Mitchell in her home office of her new Walled Lake house. She and her husband, Kris, had planned to stay in their small rental for another year. Then the pandemic hit and there was no room for her and her two children to work.
Malinda Mitchell and her husband, Kris, bought a 2,500-square-foot, four-bedroom colonial in nearby Walled Lake so they could have more space. “This home definitely is … Show more 
 
CLARENCE TABB JR., THE DETROIT NEWS

Mortgage incentive

The trend to upsize comes at a time when interest rates are at record lows. 

Mortgage buyer Freddie Mac said Thursday the average rate for a 30-year fixed-rate mortgage averaged 2.87%. A year ago it was 3.57%.

"Certainly, lower mortgage rates make it less expensive to buy a home and allow buyers to afford a larger, more expensive home for the same monthly payment," said Gus Faucher, chief economist for PNC Financial Services Group. 

"That being said, prices are rising, so that has to some extent offset the benefit of lower mortgage rates. But overall, the drop in mortgage rates over the past couple of years, and especially since the spring, has allowed homeowners to 'buy up' and purchase more expensive homes."

Darralyn Bowers, a broker with Bowers Realty & Investment in Southfield, said she sees buyers with the ability to purchase more house than before.

"Because of this you can almost buy twice as much house than you could have bought when the interest rate was 6.5%," she said. "You can buy a much larger house and the only difference would be the amount of the taxes and variance for schools and municipal amenities."

Lower interest rates were a factor for Debora Herron, who is moving with her husband from a two-bedroom apartment in Farmington Hills to a three-bedroom house with a basement in Sterling Heights. 

Herron said purchasing a home became a priority "with interest rates going down and every year the rent goes up."

She said rent would have been $1,800 a month as of Nov 1. while her house payment will be $1,900 including mortgage, interest, and property taxes.

Herron, a director of nursing for a nursing home, often does staff-scheduling at home. She says the basement will serve as her office and the additional bedroom will be useful when a caretaker spends extended time at the home caring for her husband.

“I do lots of work from my house,” she said. “I was in a two-bedroom. It was just a crowded apartment. I feel I needed a breathing space.”

Herron said she had never wanted a house, but the pandemic made her reconsider. She thought of her seven children, 24 grandchildren, and five great-grandchildren.

“I couldn’t see them,” she said. “It was no place to distance yourself from them.”

Her apartment had a yard, but there were always a lot of kids outside, she said.

“This way I have my own space,” said Herron, adding she’s been looking for patio furniture. “The backyard is going to be my place to go when it’s warm.”

Not enough homes

One result of increased demand and low-interest rates is low inventory. Lack of inventory was an issue prior to the pandemic, but it’s been magnified more recently.

After seeing positive gains in July, year-over-year home sales fell in August, according to data gathered by RE/MAX of Southeastern Michigan. Sales are down 12.3% over last year for southeast Michigan.

There aren't enough homes available to meet current buyer demand, Schneider said. The supply of inventory is currently at two months for southeast Michigan, the lowest level reported since March when traditional home-showings came to an abrupt halt and many took their properties off the market.

“Buyers remain optimistic and active in the market looking for homes, and are still competing with other buyers,” Schneider said. “Sellers are getting favorable prices and terms, and those turning around to buy themselves find they have great purchasing.”

Gino Tozzi, a broker with Johnstone & Kercheval in Grosse Pointe, said the search for roomier properties coupled with a shrinking inventory has resulted in buyers taking longer to find a home.

“We’re showing more homes on average,” he said. “Instead of us getting an offer in a few days, it’s stretching into weeks where we find something suitable. Then another issue is that when you do find something that’s suitable, you have all these other buyers that want to make offers so you’re in that multiple-offer situation nobody really wants to be in.”

Precht, who moved from Berkley to a bigger house in Plymouth, said she experienced that first-hand.

"Buying a house right now is insanity," she said. "Every time we would think we had a house, it would be gone. Every time we set up a showing, it would be gone. The house that we actually bought was on the market for five days, and we were one of I forget how many offers.

"We just tried everything in our power to make our offer look different. We wrote letters, and it ended up that we wrote a letter and the letter won over the seller. We wrote that we were moving in that particular house to be more near family, and apparently, that helped."