As the effects of the pandemic continue, our Central Indiana real estate market remains very strong despite a slim amount of inventory. As a result, home price appreciation and values are soaring.
In addition, recent industry research shows how buyers’ behavior has changed during the coronavirus health crisis. Highlights are as follows:
The Changing Buyer
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.
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. Freedom from the bounds of the commute has allowed some buyers to expand their searches beyond city centers to the suburbs and exurbs (surrounding small towns)—which may also offer more affordable housing. “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 water-front communities, recreational communities, rural areas, etc,” Lautz said.
4. Multi-generational households may grow more common. 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 and bedroom on the first level for aging parents.” 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. “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. Also, NAR research has seen a rise in roommates pooling their incomes to purchase a home together. 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 further out may be just fine.”
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 and for those whose income has not been affected by Covid, money is building in their accounts as they don’t travel and eat out. Consumers are looking at what they have and deciding it’s time to make a move up, or to something that more adequately fits their needs. The added benefit of making a move now is the limited amount of inventory on the market, thus making it easier for them to sell their current home as they move on to something else.
At McNulty Real Estate Services we are certainly seeing a little bit of all these trends in our transactions.