Three Housing Trends Fueled by the Pandemic

Three Housing Trends Fueled by the Pandemic
The COVID-19 pandemic has brought about three housing trends in the real estate market: a preference for vacation and suburban homes, bidding wars or buyer competition, and an increase in the number of first-time home buyers.

Preference for vacation and suburban homes The increase in working from home has freed remote workers from work commutes, so many are looking for alternatives in vacation homes. Comparing the data of 2019 and 2020, the sale of vacation homes has risen by 16.3%, making vacation homes 5.5% of total homes sold in 2020. Many real estate professionals have reported that their clients who live in urban areas are showing an inclination to buy homes in rural or suburban areas.

Bidding wars or buyer competition Let’s shed light on one of the most common housing trends fueled by the pandemic. Due to the fall of mortgage rates to record low levels, there is an increase in home buying; since the home inventory is too low to meet buyer demand, buyer competition is fierce, leading to bidding wars. Per the National Association of REALTORS® (NAR) REALTORS® Confidence Index survey, for each sold property, there are four offers on average.

Increase in first-time home buyers The previously mentioned record low mortgage rates have fueled the housing trend of first-time home buyers’ investing in the real estate market. In 2020, first-time home buyers made up 33% of home sales; but on the flip side, the increase in home prices made it difficult to purchase homes. Some potential buyers took a backseat, due to higher closing costs and down payments caused by lack of supply for lower priced homes in the housing market; however, many buyers were ready to stretch their budgets, in spite of the tight supply.