The COVID-19 pandemic has had a noteworthy impact on homeownership. Although the virus continues to take a toll and unemployment remains above pre-pandemic levels, the housing market has been booming, and trends are starting to emerge, according to the National Association of REALTORS®’ newly released “2020 Profile of Home Buyers and Sellers.”
The profile, produced annually, contains a new section this year that examines how the pandemic is affecting people’s attitudes and purchase and sales decisions. This year’s report reflects responses from more than 8,000 Americans surveyed between July 2019 and June 2020.
“The coronavirus without a doubt led home buyers to reassess their housing situations and even reconsider home sizes and destinations,” says Jessica Lautz, vice president of demographics and behavioral insights for NAR. “Buyers sought housing with more rooms, more square footage, and more yard space, as they may have desired a home office or home gym. They also shopped for larger homes because extra space would allow households to better accommodate older adult relatives or young adults that are now living within the residence.”
Trends Emerging Among Buyers Since the Pandemic
1. Multigenerational homes grow in popularity: With people sheltering in place, buyers are showing an increasing desire to bring more family members under one roof. Buyers purchasing after the start of the pandemic in the U.S. were more likely to purchase multigenerational homes—15% versus 11% who purchased prior to April 2020. They cited multiple reasons, such as the health and caretaking of aging parents and relatives, cost savings, the desire to spend more time with aging parents and relatives, and the need for the delayed independence of children. They also said buying a multigenerational home allowed them to pool multiple incomes to purchase a larger home.
2. Homes are pricier: Those purchasing after March were more likely to purchase a more expensive home—$339,400 compared to $270,000 for those who purchased before April. What’s more, 23% of buyers who purchased after March purchased a home that was $500,000 or more. Those who bought after the COVID-19 outbreak began tended to have higher incomes: $100,800 compared to $94,400 for pre-April buyers.
3. Shorter house tenures are expected: With the pandemic driving some purchases that might otherwise have been delayed, it’s unsurprising that some buyers see the purchase as a stepping stone. Those who purchased after the COVID-19 outbreak say they plan to stay in their home a median of 10 years compared to 15 years for those who purchased in the nine months prior to the pandemic.
4. More renters become owners: The pandemic has driven home purchases among those who were renting an apartment or house. Prior to April, about 36% of home buyers were coming from the ranks of renters; since then, the percentage has jumped to 45%.
5. Buyers show love to suburbia: Among buyers who purchased between April and June of this year, 57% picked a suburban location, compared to 50% of pre-pandemic buyers. Buyers haven’t abandoned urban areas, however. Prior to the pandemic, 12% of buyers purchased in an urban area or central city; since April, that percentage has increased slightly to 14%.
6. Searches speed up: Buyers who purchased after March searched for just two weeks before working with an agent; those who purchased before the pandemic searched for three weeks before contacting an agent. In addition, buyers who purchased after the start of the pandemic have been more strategic in their home search, limiting how many homes they view in person. Since the pandemic began, buyers have walked through a median of eight homes in person, slightly lower than the nine homes prior. When choosing an agent, buyers who purchased after March were more likely to turn to friends or family members. This is possibly because buyers were taking precautions and limiting contact with people outside their immediate circle, the report posits.
7. Certain buying segments grow: While married couples continue to be the largest segment of home buyers, others increased their purchases during the pandemic, particularly unmarried couples and some minority groups. Before the pandemic, single females were the most likely after married couples to purchase real estate, but their share has dropped from 18% to 14% during the coronavirus outbreak. On the other hand, unmarried couples increased their share (rising from 9% to 11% of all buyers), as are “others” (rising from 2% to 3%), a category that likely reflects roommates, the report notes. The Hispanic/Latino share of home buyers increased since the coronavirus outbreak (rising from 7% to 9%). Asian/Pacific Islander buyers also have doubled as a share of the buyer market (rising from 4% to 8%), the report shows. Black/African American buyers remained at a 5% share of buyers during both periods. White buyers still made up a majority of purchasers, but their share declined slightly, going from 84% of buyers pre-pandemic to 82% in the months since March.
7 Trends Among Sellers Since the Pandemic
1. Looking to upsize: Homes have felt smaller in the pandemic. Home sellers who sold their home after March were more likely to report the main reason for selling was because their home felt too small (18% compared to 13% of those who sold prior to the pandemic). Downsizing has become less popular. Even sellers over the age of 55—who tend to be the most likely to cite a desire to downsize—have shrunk their house footprint by only 100 square feet, the report shows.
2. Feeling urgency: Sellers are more likely to say they feel at least somewhat a sense of urgency to sell their home. Sellers who sold after March were more likely to say they were somewhat urgent in their need to sell their home—46% compared to 39% of those who sold before April. Prior to the pandemic, 47% of sellers said they did not need to sell urgently and could wait for the right offer, compared to 40% of those selling during the pandemic.
3. Technology becomes more necessary: More contactless methods grew in importance as homes were listed since the pandemic began. Sellers who sold their home during the coronavirus outbreak were more likely to rely on technology as a marketing tool, particularly the use of virtual tours. Twenty-seven percent of sellers during the pandemic have said their agents used virtual tours compared to 17% of those pre-pandemic. Video also became a more popular marketing tool, with usage growing from 12% to now 18%.
4. Incentives haven’t disappeared: Despite high buyer demand, sellers entering the market after March also used incentives to help attract buyers. Thirty-eight percent of sellers who sold after March used incentives, compared to 31% of sellers who sold prior to the pandemic. The incentives that have increased in use since the pandemic began have been credit toward remodeling or repairs and home warranty policies.
5. Equity gains: Home prices have risen since the pandemic, a boon to sellers. Home sellers who sold since the pandemic began sold their home for a median of $300,000; those who sold prior to the pandemic sold for a median of $270,700. Nearly one-quarter of sellers who sold after March sold their home for $500,000 or more. The median dollar amount that sellers have gained since the pandemic is $80,000 in equity compared to $64,000 prior to the pandemic.
6. Long-timers appear more motivated to move: Home tenure among sellers in the survey was 11 years, the same as before the start of the pandemic. However, 40% of sellers who sold after March had owned their home for 16 years or more, compared to 34% of sellers who sold before April.
7. Desire to live close to family remains strong: For the second consecutive year, home sellers say a primary motivator to move is so they can live closer to friends and family. That trend continues to be common in the pandemic, although now it's among home sellers who are planning to move farther away. Home sellers who are moving closer, within city limits or nearby, tend to be relocating out of a desire to move into a larger home.
Source: magazine.realtor
