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Changes in Homebuyer Behavior & Expectations 1 Year into the Pandemic

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Changes in Homebuyer Behavior & Expectations 1 Year into the Pandemic

At the beginning of 2020, right when the pandemic hit, our homebuyer flash survey revealed that many home seekers were forced to put their plans on hold. But although house hunters have resumed their activity, the new market conditions are shattering their hopes of buying — only 21% still plan to buy a home in the next six months. This is a dramatic drop compared to the 34% of people who were still hoping to buy soon when the pandemic began and the 53% who were expecting the same in 2019.

Americans have been trying to find new, better homes and have resume their pre-pandemic house hunting practices. However, those who are currently looking for a home are becoming acutely aware of the fiercely competitive market conditions. From strong demand and a tightening inventory to skyrocketing prices, bitter bidding wars and taxing credit requirements, buyers are not in an enviable position.

  • The share of respondents who were very determined to buy a home went from 19% in 2020 to 48% in 2021.
  • A heartening 51% of prospective homebuyers stated that they had no specific concerns when going through the buying process. While they worry more about having enough properties to choose from, concerns about financial stability and safety during viewing were dropping.
  • Although they wanted to buy, home seekers didn’t have high hopes about the timeline: The share of people who hoped to buy in the next six months plummeted, from 34% last year to 21% this year. 
  • Despite home prices rising at breakneck speed, 51% of respondents were confident that the steep price hikes would not be a problem. However, 45% stated that they would not be able to keep up.
  • People were also ready to give up virtual home touring and resume in-person viewings. Interest in online pictures declined and 11% of respondents expressed interest in going to showings this year, compared to just 4% last year.

Buying a home in 2021 comes with a new set of challenges for home seekers all around the country. Low supply was an issue even prior to the pandemic started and the chain reaction triggered by it has only deepened the problem. Even so, despite all of the hurdles, many home seekers seem much more determined to buy this year than last year.

Whether they want to be better prepared in case another wave of COVID-19 hits the nation or they simply hope to continue working from home, prospective homebuyers know what they want: more indoor space, more outdoor space and better floor plans and layouts. In short, new, bigger and better homes.

Survey respondent:

If you don’t buy now, you will be living in a smaller home and on smaller lots or no lots in the future.

We asked survey respondents to share their current concerns and what drives their homebuying decisions. The quotes below and throughout the article represent the most common answers:

Buying now will at least give you more space inside and outside the home.

In certain desirable non-urban areas, homes are being snapped up more quickly than before the pandemic.

Clearly, people are house hunting like never before. In fact, only 6% of respondents stated that they would stop looking for a home for the time being, while nearly 50% said they were determined to buy as soon as they found the right property.

  • An impressive 48% were determined to buy when they could find the right property up from 19% in 2020.
  • Only 6% of respondents stopped actively searching, down from 29% last year.

  • Only 21% of respondents, compared to 34% last year, hope to buy in the next six months.
  • 40% are unsure when they’ll be able to buy, up from 28% last year.

Meanwhile, in response to how soon they hoped to buy a home, 40% of respondents up from 28% last year stated that they didn’t know. The share of people who expected to buy in the future has remained largely unchanged, but those who expected to buy in the next six months are much fewer compared to 2020. Last year 34% of home seekers hoped to buy within the following few months, whereas only 21% of respondents this year were looking at the same time frame.

It seems hope is running in short supply in the current housing market, where increasing prices, bidding wars and tight inventory are definitely crushing the advantage created by low mortgages and financial aid.

Furthermore, many home seekers are torn between feeling relieved and happy about the vaccine and the “return to normalcy” on the one hand, and being disheartened by the fact that the number of properties they can choose from is dwindling fast on the other hand.

Survey respondent:

Being vaccinated gives me more peace of mind, but it seems properties have dried up. It’s frustrating.

Financial stability concerns have also decreased, from 30% of survey respondents in 2020 to 22% now. And, importantly, home seekers’ concerns regarding health and safety are also declining. In 2020, 8% of respondents were worried about their safety during showings, but only about 3% retain some fears about this process in 2021.

Conversely, not having enough properties to choose from is a cause for concern for 17% of house hunters, up from just 12% last year. With supply increasingly dependent upon new builds and with fewer and fewer people willing to downsize or put their home on the market house hunters are looking at what feels like a totally inadequate pool of properties. As one respondent stated,

I’ve been looking since December 2020 for a home but everyone keeps taking them off the market or increasing their pricing at a ridiculous amount. I’m looking for houses in the Dallas area. I can’t even find rental properties with a decent price range for what they’re requesting. I’m running out of time and options.

  • Concerns about the housing shortages are increasing: 17% of current respondents compared to only 12% last year — were worried about having enough properties to choose from.
  • Only 22% of respondents were worried about their financial stability, compared to 30% in 2020.
  • 51% of respondents didn’t have any concerns about homebuying, up from 43% last year.

Along with falling levels of concern overall, potential buyers are also more ready to embrace the tried and true ways of finding their ideal home: For example, last year only 4% of home seekers were still willing to go to viewings, whereas showings and open houses were the best option for 11% of respondents this year.

Similarly, simply looking at pictures and virtual tours, an alternative that experienced a significant boom in 2020, is definitely losing steam this year: Only 25% of home seekers would still opt for this, down from 50% last year.

  • This year, 11% of home seekers (compared to only 4% at the beginning of the pandemic) want to resume going to viewings and open houses.
  • Interest in sticking exclusively to pictures and virtual tours also plummeted, from 50% to only 25% of respondents this year who were willing to go the virtual way.
  • Reliance on real estate agents has also increased: 8% of home seekers, up from 5%, depended on their agents to find the right home for them.

I expected it [the price] to go down and it has skyrocketed instead.

However, as home seekers become less concerned about health and safety issues, they’re getting more stressed about inventory.

Last year, many homebuyers expected the pandemic to take a toll on their finances and on home prices as well. Therefore, lowering their home buying budget and looking for less expensive properties seemed like a good plan. However, the pandemic actually had the opposite effect on home prices and even on people’s finances: Price tags went through the roof and the governmental aid coupled with low mortgage rates meant that many home seekers could aim higher, not lower.

For instance, last year 27% of all survey respondents stated that they would start looking for less expensive homes. But in 2021 only 13% of respondents reported that they had lowered their homebuying budget due to unemployment, increased financial instability or fear of job loss.

  • Only 13% of potential homebuyers compared to 27% last year considered lowering their budget.
  • In 2021, 65% of home seekers up from 43% last year stated that they wouldn’t change their buying process and didn’t expect the pandemic to interfere with the process in any meaningful way.

 

Survey respondent:

I can keep up with these prices; but for most other people in my age demographic I feel like they will end up with mortgage debt for the rest of their lives.

A significant 38% of respondents stated that they had noticed an increase in home prices in their area of interest and 45% of all survey respondents fear that they wouldn’t be able to keep up with the price increase. And although an impressive share of respondents believed that keeping up with the price hikes wouldn’t be a problem, fears about losing their job made some home seekers more reluctant. Even with parts of the economy starting to reopen, sectors like commercial real estate that house many businesses and jobs are lagging the others — from big markets like Chicago office space down to the small ones.

  • Nearly half of survey respondents (48%) didn’t know whether prices had changed, which could point to a more superficial interest in the market.
  • 38% of home seekers saw prices increase in their area.
  • 9% of respondents stated that they didn’t notice significant price changes in their areas of interest.

Survey respondents:

Higher prices, homes going too fast at escalated prices, not being able to get in to see property fast enough!

People now want East and West Coast prices for just dirt and weeds. I’m not going to pay anywhere near those outrageously overinflated prices.

With such a small supply of homes for sale and low interest rates, the existing homes for sale have skyrocketed in price. I cannot see spending tons on tiny homes at this time to downsize from my home of nearly 30 years.

 

  • While the price increases were not a problem for 51% of respondents, who stated that they believed they could keep up with the new values, 45% stated that they wouldn’t be able to stay the course under these conditions.

Survey respondent:

I can comfortably afford a mortgage between $250-$350K; however, the things I could have gotten a year ago are now priced in the $500-$750K range. It’s incomprehensible how the market can change so much in one year.

What do the real estate agents think?

We also asked some real estate agents how this period had affected them and their business, as well as how they believed the pandemic would continue to influence the homebuying and selling processes.

While many agents (46%) saw a drop in buyers’ interest and overall activity, an equal share of respondents stated that home seekers’ efforts had intensified. Check out three very different perspectives below:

I am working only half days; my office staff and agents are working from home. I have my office closed to clients. All business is conducted by mail, phone, email and fax. I do not actually sell a lot of homes; I sell a lot of farm property.

We are working much harder.. for less. Low inventory + a lot of buyers in the market = multiple offers on just about everything. Writing many offers with few getting accepted.

My business is booming. I’ve created a team, added two buyers agents and an admin. We have more people than ever leaving cities all over the US and moving to our area. We now have a severe housing shortage in our area.

And, although agents did much more for their clients during these trying times, 61% of those who got back to us said they had noticed a drop in revenue, with some of them even considering closing their business. More precisely, 29% saw their total revenues increase and 10% of agents said the pandemic and the new market conditions had no influence on their business and revenues.

The market is open and we are not out of the woods. I think we are going to feel the effects of the pandemic in 2022 and the market will take a hit.

Among the most common changes agents made to accommodate their clients’ needs were taking more pictures of homes, spending more time on the phone answering client questions and including more virtual tours in home descriptions (80% of agents). However, while a few of the agents believe that the changes brought on by the pandemic would slowly vanish, the majority said that both health and safety measures as well as the process going online are here to stay.

More sanitation, no viewings without pre approval letters. Virtual is the way to go!

Significant changes in technology. More documents signed electronically, more meetings online, less people at closings and, hopefully, more careful attention to details.

More things, i.e. contracts and closing, will more often happen virtually.

 

Home seekers all across the U.S. remain positive about the buying process, and seem more determined than ever to find the perfect home. Although the competition is fiercer than it has been in the past, many Americans are keeping their eyes on the market and are willing to play by the new rules which imply more preparation, higher offers and going through bidding wars without losing hope. 

Methodology:

  • The surveys were posted on the Point2 Homes real estate marketplace between March 15 and April 5, 2021. There were 2637 usable answers. All percentages were rounded.
  • Current survey data was compared with 2020 Homebuyers’ Survey results.

Fair use and redistribution

We encourage you and freely grant you permission to reuse, host, or repost the story in this article. When doing so, we only ask that you kindly attribute the authors by linking to Point2Homes.com or this page, so that your readers can learn more about this project, the research behind it and its methodology.

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