With the COVID pandemic, the Real Estate market has seen some dramatic changes over the past 2 years. In early 2020, we saw a sharp drop in buyers searching for homes followed by a fairly rapid recovery by 2021. Between relaxed regulations & an increase in monetary initiatives, the housing market was one of the first industries to rebound from the pandemic. In fact, by the end of 2020 & heading into the new year, the market was dominated by historically low inventory. Even with bidding wars becoming more common, buyers are still looking for specific features in their new homes.
Top Features for 2021 Home Buyers
With the pandemic affecting daily lives, 51% of home buyers indicated that they desired different features to suit their needs while 23% said it had it major impact on their home search. This effect has been most prominent with the younger generations like Millennials & Gen Z, while Baby Boomers had a lesser need for different features. Some of the most desirable features that were considered high priority include having a quiet location, an updated kitchen, a garage, a large backyard, an outdoor living area, updated bathrooms, space for pets, a home office, high-speed internet available, & an open floor plan. Other less common features that were high-priority include a short commute time, having a pool/spa, a mother-in-law suite or guest room, & walkability/bike-ability to neighborhood amenities. These features were more sought after with the pandemic affecting our daily lives but a majority of these buyers would sacrifice the extra rooms & amenities to meet budgetary needs. So, what were the top reasons for Home Buyers entering the market in 2021?
Top Reasons for 2021 Home Buyers to Shop for Real Estate
1. Family Needs More Space
With so many people working from home, needing more space was the #1 reason representing 17% of home buyers’ reason for planning to purchase a new home. During this time, people also considered their options for purchasing & renting out to friends or family.
2. Interest Rates Are Still Low
In the second half of 2020, interest rates reached historically low percentages often seeing under 3% APR for a Conventional 30-year mortgage. While savings for the down payments may have been negatively impacted by the pandemic, this allowed many buyers access to the funds for a mortgage. This led to 16% of buyers citing low interest rates as a top reason for buying a home.
3. Household Is Expanding
Of those homebuyers planning to purchase in 2021, 11% of people stated that their household expansion was the primary reason for searching for a home. Common causes of household expansion include moving in with a partner, having kids, adopting pets, or elderly family members moving into the buyer’s home.
4. Saved Up Down Payment Last Year
With a lot of entertainment & leisure activities being put on hold, many people decided to save up money to purchase a new home when the market settled. 11% of those looking to purchase a home in 2021 quoted the top reason for purchasing as having the savings built up from 2020.
5. Buyer Desires An Outdoor Space
With so many people at home in 2021, outdoor activities saw a huge influx of people finding new hobbies & enjoying their outdoor spaces. For those planning to buy in 2021, 10% of people cited the need for an outdoor space as the reason for searching for a new home.
6. Buying Could Be Cheaper Than Renting
With rent rates on the rise & simultaneously having historically low interest rates, a noticeable amount of people found that it was more cost-effective to purchase a home rather than to rent. People who wished to stop renting & purchase a home for the financial benefits represented 8% of those planning to buy in 2021.
7. Couldn’t Buy Last Year
In the second half of 2020, the Real Estate market began to see the very real effects of having low inventory. Those that were unable to buy a home in 2020 represented 7% of the market who were planning to purchase in 2021.
8. Move Farther From Work
With the pandemic, many industries discovered the benefits of a work-from-home schedule for the company & the employees. Even with the return to office in mid-2021, many industries found that they could use a 50-50 split between working at the office & at home. This led to 5% of buyers in 2021 citing the ability to live farther from work as a top reason for purchasing.
Other reasons for people planning to buy a home in 2021 included the need to downsize, desire to move/relocate, desire to stop renting, moving closer to friends/family, purchasing a vacation home, entering retirement, or relocating for higher education. These reasons combined represent 14% of homebuyers in 2021.
The Average Home Buyer in 2021
Short Answer - 45 Years Old | Partnered/Married | Some College Education
Although the “average” home buyer doesn’t change much year over year, there are some factors that are shifting in more recent years. Millennials make up the largest generation, ranging from 39 to 21 years of age & many experts consider 30 years old to be the average age to become a first-time homebuyer. The increase in buyers over the past couple of years along with more buyers entering has led to historically low inventories in many markets across the United States. Although a majority of buyers purchase single-family homes, there has been an increase in purchasing townhomes or condos. Many buyers are also working from home more frequently so having the square footage to set up a station has become important. These homes are averaging 1,000-1,999 square feet with 3 bedrooms & 3 bathrooms. Finally, a majority of buyers are moving from a previously owned (or still owned) home, representing 61% of buyers in 2021.
In the second half of 2021, the Real Estate market is continuing to see historically low inventory. With another 8-10 years of Millennials entering the buyers market & a foreseeable supply chain issue, we can expect to see a continued need for more houses to be listed for sale. From a financial perspective, interest rates have stabilized for the most part although they are still on the low end of the scale. We can’t say for certain what 2022 holds for the Real Estate market but we will continue to evaluate the trends. For a more in-depth analysis of the market, please reach out to schedule some time to chat about your home buying or selling needs.
For more information on the current market trends & reasons for buying a home, you can visit the article on Realtor.com HERE.
2021 Real Estate Market Report Sources:
Realtor.com: Homebuyers Seek Versatile Homes 2021
Zillow.com: Buyers & Consumer Housing Trends Report 2021
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