Homebuyers Return to the Exurbs

It's been a while since 2008, and a new crop of homeowners is colonizing the far-flung exurbs. Mostly foreclosed and even abandoned last time around, the exurbs are still a risky buy.
July 30, 2015, 5am PDT | Philip Rojc | @PhilipRojc
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Written off (sometimes literally) after the Great Recession, the exurbs are back. Buyers' motives are largely the same: extreme prices and scarce options closer to the urban core. The situation is particularly outlandish in the Bay Area: "Buying was impossible: The median price is almost $1 million. In Mountain House, about 55 miles east in the San Joaquin Valley, [homes sell for] for less than half that."

Thankfully, the commuters of the exurban diaspora featured in this article can take the train to work. "If we had to drive we wouldn't last," one of them remarked.

Without viable housing options closer in, young people with families often consider settling down far, far away. "The push to the outskirts is being fueled by the more than 4 million new jobs created since 2013, historically low mortgage rates and a population bulge of millennials settling down."

With 2008 in mind, experts doubt whether that decision could ever be wise. "The exurbs' comeback is precarious because they're attractive to buyers who 'could be more sensitive to mortgage-rate increases,' said Megan McGrath, an analyst with MKM Holdings. 'The longer-term risk is that it's a more vulnerable land position to hold ahead of the next housing downturn.'"

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Published on Thursday, July 16, 2015 in Bloomberg Business
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