As the effects of the pandemic continue, nine in 10 REALTORS® say their housing markets are in recovery mode, with many even saying their markets are hotter now than a year ago, recent member surveys from the National Association of REALTORS® show.
“The delayed spring market is definitely occurring now in the summer months,” says Jessica Lautz, NAR’s vice president of demographics and behavioral insights. The housing market is seeing unprecedented monthly jumps in existing-home sales, and home price appreciation remains strong. (Read more: Contract Signings Make a ‘Remarkable’ Move and Existing-Home Sales Surge to Record Pace in June)
Lautz notes several insights, culled from recent NAR research, that show how buyers’ and sellers’ behavior is changing during the coronavirus health crisis. She highlighted those findings at Thursday’s “REvive! From Crisis” virtual conference that featured an all-day lineup of industry leaders and speakers.
1. Buyers are in a rush. Last year, buyers looked at an average of nine homes before making a home purchase. Now, they’re looking at three to four homes before initiating a contract. “Buyers are fast-forwarding their transactions,” Lautz says. Homes are selling in an average of just 24 days. More than a quarter of REALTORS® report their buyers are acting with greater urgency over recent weeks, particularly those making home purchases in rural areas.
2. Wish lists are shifting. Home shoppers are changing some of their priorities for home features. For example, NAR research shows that the top feature desired by buyers is a home office. Many households may need more than one. Also, more home buyers are sizing up outdoor space, showing an increasing desire for a pool, garden, or just more space to enjoy the outdoors.
3. Buyers are less concerned about commutes. As remote work grows, 22% of about 2,300 REALTORS® surveyed by NAR say their buyers are becoming less concerned about commute time when shopping for a home. Freedom from the bounds of the commute has allowed some buyers to expand their searches beyond city centers to the suburbs and exurbs—which may also offer more affordable housing. A quarter of REALTORS® report their buyers are looking away from the city center and toward to the suburbs or smaller towns. “If workplaces keep changing and there’s this greater acceptance of remote working, this trend could stick around longer,” Lautz says. Also, second homes may be in greater demand. “If they can work from any place, we could see more buyers embrace second homes in rural areas,” Lautz said.
4. Multigenerational households may grow more common. One in six Generation Xers and younger baby boomers purchased a multigenerational home pre-COVID. Lautz suggests that trend could increase as more generations, including aging parents and adult children, all come under the same roof during the pandemic. “Moving forward, that could mean your buyers will be looking for larger single-family homes,” Lautz says. “They also may want to make sure they have a sizable living space on the first level” for an aging parent. (Read more: Will McMansions Trend Once Again?) Also, recent surveys show a growing desire of buyers—particularly younger buyers—wanting to live closer to their family. The top reasons to move before the pandemic were a new job, marriage, or baby. But now most moves are being driven by young millennials—twenty-somethings—who want to be near their family or friends. “The family unit appears to be becoming more important, and I think COVID could increase this trend,” Lautz says.
5. Pets could drive purchase decisions. The pandemic has sparked a surge in households that want a pet. NAR surveys have shown that pets can influence when and where people buy. Forty-three percent of households say they’d be willing to move to better accommodate their pet, according to NAR’s 2020 pets in real estate study, “Animal House: Pets in the Home Buying and Selling Process.” “We see consumers actually want to buy a property because of a pet, and then they may want a fenced-in yard and extra space for their animals,” Lautz says.
6. A first-time buyer wave could emerge. Consumers may show more commitment to their home than to long-term relationships. In the 1980s, 75% of first-time buyers were married. In 2019, that dropped to 53%. Young adults are waiting longer to get married. Meanwhile, unmarried couples are buying homes at the highest levels ever recorded by NAR: 17%. Also, NAR research has seen a rise in roommates pooling their incomes to purchase a home together. NAR’s research shows that percentage at a mere 4%, but Lautz notes it’s the highest share that NAR has ever recorded. Overall, in 2019, first-time buyers comprised 33% of the housing market, still a low number by historical standards. “But there could be an uptick, particularly in affordable places further out,” Lautz says. “If young professionals become less tied to a metro area for work—in metros where it can be difficult to afford a property—they may increase their purchases.”
7. Housing tenure could fall. Over recent years, homeowners have stayed put in their homes longer than they have in past—an average of 10 years, which is longer than the traditional six-year average. Americans are not moving longer distances like they did in the 1980s. As cities urged stay-at-home restrictions during the pandemic, consumers may start to question whether their home fits their current needs. “Interest rates are at all-time lows; [consumers] may want to move and find a home where they can work from and the kids can too, and they want more yard space to relax,” Lautz notes. “This change in homeowner tenure could be one we see coming soon.”