The Covid-19 impact on real estate is a study in contrasts when the "before" and "after" data is reviewed. Seismic shifts of day to day activities impacted every aspect of life, including residential real estate. The pandemic seems to have changed how home buyers and sellers act and what they value (for now anyway). Also clear; the pre-covid inventory shortage was further exacerbated by shut downs and fears of having people walk through homes. Fewer homes, low rates, increased competition and prices came together. A section of the 2020 national association of realtors report compared the housing market before March of 2020 with that after; some familiar trends were reinforced while new ones appeared.
Multi-Generational Homes are In
Desire for multi-generational homes continues to increase. This isn’t new; this trend was increasing before the pandemic. Many owners are having housing challenges with elders and kids. The astronomical cost of assisted care for elders almost mandates bringing them in. Many “boomerang” kids saddled with student debt are facing a tough job market and “stacking bread” with the parents is popular again. 15% of buyers who purchased after March bought a multi-generational home compared to 11 percent who purchased before April.
The ‘Burbs are Hot, Again
Media sources regularly report that people are leaving major cities in an attempt to socially distance, to reduce stress and reduce the cost of living. No longer welded to an office, they seem to be moving to the burbs and getting more for less. 57% of buyers who purchased during the pandemic purchased in a suburban location, compared to 50% of pre-pandemic buyers. However, in smaller towns, 23 percent of buyers who purchased prepandemic purchased in a small town compared to 16% of buyers post-pandemic. Purchases of homes in vacation areas have skyrocketed as well.
Prices Continue to Rise
While there are hundreds of variables to consider, it’s reasonable to say that the median price of a home increased after the pandemic. Median values were rising prior, but after April that rate jumped. Not only are median prices up, the combination of low rates, limited inventory and the requirement for space in homes pushed many buyers into higher price points. Pre-pandemic buyers paid a median price of $270,000; post pandemic it was $339,400. 23% of buyers who purchased after March purchased a home that was $500,000 or more. Understanding area market trends is key to not overpaying for a home.
Buh Bye Tiny Homes
The “tiny home revolution” that was promulgated by the media, is over. HGTV thought highly of living in a storage shed on wheels (at least for 22 minutes an episode), no one does now. Size matters, especially when the home needs to accommodate extra people and provide a workspace. Multi-generational living, home schooling and the simple desire for space jumped after March 2020. Before March, most sold their home because they wanted to be closer to friends and family. After March most said the main reason for selling was because their home was too small. 39% said the need to sell was somewhat urgent before March, after March that number rose to 46%. This impacted both buyers and sellers; sellers of larger homes (true empty nesters) found an increased number of ready and willing buyers. Buyers were more open to leveraging low rates to stretch a bit and grab those larger homes.
FaceTime Me, Zoom Me
The rise in technology is obvious; the use in real estate has always been strong but increased even more. In fact, “Zillow-surfing” has become a thing as people look for distractions aside from the TV. 97% of buyers use the internet to search of homes. That number was about even between those using phones and computers. Virtual tours for homes listed before March were 16%, after March that increased to 27%. Agents “virtually walking” a home with a buyer isn’t unusual; FaceTime, Zoom and other methods are now used to provide an even more detail. Buyers and sellers are now placing more value in an agent's ability to leverage tech and be more responsive. Homes with multiple offers and bidding wars are seen quite frequently.
Hello & Good Bye
The idea that a home is “forever” continues to dwindle. This isn’t new, the idea of retiring with a gold watch and pension from one company is long gone. Startup companies, consulting, self-employed and “gig” workers mean that few people spend a significant amount of time with one employer; never mind in one place. Everything was jolted by the pandemic and the trend of “job hopping” continues to grow. Pre-pandemic buyers expect to be in their home 15 years, post pandemic buyers 10 years. The rental market for single family detached homes is on fire; some potential buyers are just letting things develop.
Even in the midst of a pandemic that couldn't have been anticipated, residential real estate remains a desired commodity; you have to live somewhere. No one knows where things go from here, as this is written (early 12/20) all eyes are on vaccines and what's expected to be a rough winter. However, the tenants for real estate success remain largely unchanged; experienced pros, reliable data, buy/sell wisely and use common sense. How we work, shop, recreate and live two years from now isn't known but it's reasonable to assume that some of the adjustments in 2020 will carry on for at least the near future.
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