Many people in the U.S. remain determined to buy a home, but few are hopeful they will be able to land one within the next six months. These prospective buyers are growing increasingly disheartened in the current housing market.
That’s according to a survey taken a year after the onset of the COVID-19 pandemic by real estate website Point2, an affiliate of Yardi Systems. The survey gathered 2,637 responses this past spring, and the results were compared to a similar survey from 2020 to get a picture of how homebuyer expectations and behaviors had changed one year into the pandemic.
Last year, after the pandemic first hit, many potential buyers paused their plans. The good news is that more homebuyers say they are now ready to pick up where they left off with their home search. But things look a little different in the housing market now as a result of the ongoing health crisis.
Mortgage originators will want to pay close attention to homebuyer sentiments — both their anxieties and their optimism. Tight inventory and rapidly increasing prices existed before the pandemic, but these market conditions have ramped up due to the unexpected impacts of COVID-19. Thankfully, low mortgage rates and available financial aid provide at least some relief to potential homebuyers.
Renewed interest
The pandemic has fueled prospective homebuyers’ interest in more indoor and outdoor space, newer homes and more desirable layouts. Much of this interest is tied to wanting to live in less densely populated areas and to continue working from home.
This year, only 6% of survey respondents said they had stopped actively searching for a home (29% had done so in 2020). On the flipside, 48% of respondents said they were determined to buy as soon as they found the right property, a significant increase from 19% in 2020.
A number of factors contributed to respondent answers about how hopeful they are to purchase a home. These include things like the number of available properties, home prices, personal financial stability, and health and safety issues surrounding in-person viewings.
Despite increased interest in buying a home, only 21% of respondents said they hope to buy a property in the next six months, down from 34% last year and well below the 53% share in 2019. Many others don’t have a clear time frame as 40% said they are unsure when they’ll be able to purchase a home, compared to 28% who said the same last year.
Limited inventory
A combination of high demand for new-home construction and fewer people willing to sell their existing homes has meant that potential homebuyers have limited supply to choose from. Not having enough options to choose from was cited as a concern by 17% of survey respondents in 2021, an increase from 12% last year.
Limited housing supply has resulted in rising home prices. While this appeared to make potential homebuyers nervous at the start of the pandemic, fears seem to be easing somewhat this year. Nearly two-thirds of respondents said they wouldn’t change their buying process and didn’t think the pandemic would keep them from proceeding, compared to 43% who said the same last year.
About one in four respondents said they had noticed higher home prices in areas where they were interested in purchasing a home while nearly half said they didn’t know whether prices had changed in their preferred neighborhoods. Another 9% of respondents said they didn’t notice any significant price changes in their areas of interest.
Budgetary confidence
Although the start of the pandemic caused many people to have concerns about their personal finances, it seems that these worries are starting to dissipate. Last year, 30% of survey respondents said they were worried about their financial stability, a share that dropped to 22% this year.
With stiff competition in the market, not everyone feels they will be able to make a purchase if prices keep rising. Although 51% of respondents said that rising values wouldn’t be an issue, another 45% said they wouldn’t be able to keep up with these escalating market conditions.
Respondents seem to be less concerned today about the health and safety aspects of viewing homes than they were last year. Only 3% said they were worried about their safety during showings (down from 8% in 2020).
Going to in-person showings and open houses was of interest to 11% of respondents in 2021, an increase from 4% last year. It seems that virtual home tours and online photos are no longer cutting it for many potential buyers, despite the boom these alternatives saw in 2020. While 50% of last year’s respondents said they would opt for socially distanced home-viewing options, this share dropped to 25% in 2021.
Realtor distress
The survey also looked at how the pandemic has affected real estate agents and their business, as well as how they believed the health crisis would continue to influence the homebuying and selling processes. Nearly half of the agents surveyed (46%) said they had witnessed a decline in buyer interest and overall activity, while the same number said that potential buyers had increased their efforts.
Despite going above and beyond for their clients, 61% of agents surveyed said they were experiencing a drop in revenue while some mentioned the possibility of closing their business. Conversely, 29% said their revenues had increased. Another 10% said the pandemic and the resulting market conditions had not impacted their business or revenues.
Some of the most common changes that real estate agents reportedly made to accommodate their clients’ needs included spending more time on the phone answering questions. Real estate agents also reported taking more photos of homes and providing more virtual tours in home descriptions (80% of agents surveyed).
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Although COVID-19 has had less-than-desirable impacts on prospective U.S. homebuyers over the past year, potential buyers still seem determined to find their dream homes. Many of those surveyed say they are willing to navigate the new market conditions and do what it takes to become homeowners, indicating that they are unfazed by some of the unique obstacles brought about by the pandemic. ●
