There was apparently a certain
profile of home buyers before the pandemic struck and a different one after it
began. The National Association of Realtors’® (NAR’s) 2020 Profile of Home
Buyers and Sellers,
an annual report on demographics, preferences and
experiences of buyers and sellers across America shows COVID-19 caused several shifts
in America’s housing market over the past eight months. Changes in the
behaviors of home buyers and sellers were especially notable as buyers’ usual
tendencies altered, and the urgency to sell accelerated. 

  • Buyers purchasing after March were more likely to purchase a
    multi-generational home
    – 15 percent versus 11 percent who purchased before
    April.
  • 14 percent of buyers who purchased in April or later said
    their transaction was delayed
    due to COVID-19
  • Sellers who closed in April or later were more likely to
    sell because their home was too small
    – 18 percent compared to 13 percent of
    those before April

“The
coronavirus without a doubt led home buyers to reassess their housing
situations and even reconsider home sizes and destinations,” said Jessica
Lautz, vice president of demographics and behavioral insights at NAR. “Buyers
sought housing with more rooms, more square footage and more yard space, as
they may have desired a home office or home gym,” she added. “They also shopped
for larger homes because extra space would allow households to better
accommodate older adult relatives or young adults that are now living within
the residence.”

NAR found that buyers who purchased
after March were more likely to relocate to the suburbs and were more likely to
pay more for that home, no matter its location, paying an average of $339,400
compared to $270,000 for those who purchased before April. Those who bought during
the pandemic expect to live there 10 years while those who bought earlier plan
a 15-year tenure.

While completing a transaction
on-line is still rare, the percentage of buyers who bought without physically
seeing the home
ticked up from 3 percent before the pandemic to 5 percent
afterward. The post pandemic buyers were less likely to be denied by a lender -
2 percent compared to 5 percent. The later closing group also had higher
household incomes – $100,800 compared to $94,400.

Lautz notes that sellers tended to
accelerate their transactions once the crisis started. “So many sellers were
eager to get out of their old home and move to something bigger that would
better meet their needs during quarantine,” she said. Those who closed in April
or later were more likely to sell because their home was too small – 18 percent
compared to 13 percent of those before April.

Sellers after March were more likely
to use incentives
to help sell their home and received a fractionally lower
price; 98 percent of the list price compared to 99 percent for those before
April. However, those homes sold after March ultimately had higher selling
prices – $300,000 compared to $270,700 for earlier sales.

Fifty-six percent of homeowners who
sold after March sold in the suburbs, compared to 48 percent who sold before
April.

 Pandemic aside, the survey revealed
a ton of other buyer and seller data.


  • Buyers’ age averaged 55, an all-time
    high. The average first-time buyer was 33 years old.

  • The share of single women buyers
    increased from 17 percent in 2019 to 18 percent while the share of buyers with
    kids under 18 at home was a record-low 33 percent. In 1985 the share was 58
    percent.

  • The proportion of first-time buyers
    dropped 2 points to 31 percent, the lowest share since 1987’s recording of 30
    percent. Twenty-two percent of first-time buyers moved from a family member’s
    home directly into ownership.

  • Ninety-seven percent of buyers
    searched for their home online. This is the highest percentage for an online
    home search
    and is a jump from last year’s 93 percent. The time spent looking
    for a home declined to eight weeks from 10, which is the shortest search since
    2007.

  • While downsizing was uncommon,
    sellers over the age of 55 buy smaller by an average of 100 square feet. Often,
    however, they moved to a more affordable location.

  • Overall tenure in a home remains at
    an all-time high of 10 years.

  • Eighty-eight percent of buyers and
    89 percent of sellers reported using an agent in their transactions, near
    historic highs.
    For-Sale-By-Owner transactions were at 8 percent, near
    historic lows.

  • The survey looked, for the first
    time, at iBuyer usage and found that less than 1 percent sold through such a
    service.

The survey also looked at how home
buyers paid for their new homes. Eighty-seven percent financed their purchases,
largely unchanged from previous years. The 12 percent median overall down
payment was unchanged from 2019, but the number inched up from 6 percent to 7
percent for first-time buyers. The median down payment for repeat buyers was 16
percent.

Lower down payments for buyers can
be attributed to steadily increasing home prices, according to Lautz. “Because
there’s a shortage of housing inventory, we’re seeing prices jump too fast,”
she said. “These rising costs make it that much more difficult for buyers to save
for a down payment and more challenging for first-time buyers to enter the
marketplace.”

Student loan debt was the primary
barrier for those who had trouble saving for a down payment, with the average
home buyer carrying $30,000 of such debt. Twenty-six percent of first-time buyers
used a gift or loan from family or friends to help with their down payment,
down from 33 percent last year.

NAR conducted its survey by mail in
July among a random sample of recent home buyers and sellers. A total of 8,212
responses were received.

By Jann Swanson , dated 2020-11-12 10:59:55

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Courtesy of Mortgage News Daily

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