It will be a while before we can say with certainty how the real estate industry has changed.
As the COVID-19 pandemic has forced Americans to stay home more than ever over the last few months, it might not surprise you that the American definition of “home” appears to be evolving. Across the nation, my colleagues and I are seeing some fascinating real estate trends.
Some trends are clear necessities right now, such as the use of advanced industry technologies, from video walk-throughs to 3D property tours with Matterport. Most interestingly of all, it appears that buyers are venturing into the market with new ideas about what makes a home desirable.
In my region, in and around Austin, Texas, clients have been increasingly on the hunt for vacation homes within a drivable distance. Many of my clients were looking for new ways to “get out of the house.” While getting out safely can be a challenge, the problem is easily solved with a nice little water-front home you can escape to on the weekends. A second home in a vacation area can easily double as a short-term rental when not in use, as well, making it an appealing investment all around. Across the nation, sales of investment properties and second homes are on the rise, already up 4% from 2019 according to the National Association of Realtors® (NAR).
With this trend evident in my own market, I wondered what trends others were seeing in their regions. My colleague and licensed real estate agent, Amit Bhuta in Miami, has been seeing a slightly different trend. “The single-family home market in the $350,000 – $700,000 in the Miami market is on fire! It feels like I am back in time during the real estate boom from 2004 – 2007 with homes selling very fast with multiple offers and many times over asking price.” Meanwhile, he added, “The condo market has way too much inventory. Because of shelter in place and people’s greater desire for more room, condo sales have gone down substantially.”
Although these trends look slightly different on the surface, homes are much more affordable in Austin, and often already average over 2,000 square feet (according to Property Shark). The affordability of housing in Austin allows buyers to seek second homes, but the goal is the same as in Miami: people want more space.
In keeping with this trend, in July national single-family home sales were up 9.8% from a year ago, while condominium and co-op sales are just now leveling off at last year’s numbers, according to the figures published by the NAR.
The NAR’s chief economist, Lawrence Yun reported that “Single-family homes are continuing to outperform condominium units, suggesting a preference shift for a larger home, including an extra room for a home office.”
My colleagues on the West Coast have seen a similar shift in what buyers are looking for in their homes. Barbra Stover, of Stover Estates in Beverly Hills, said, “Buyers for the westside neighborhoods like Beverly Hills, Malibu, Santa Monica, Silicon Beach areas are only looking for single family homes with extra space for a zoom room/office, and a nice yard because of the virus and lockdowns. Buyers are looking for a home to enjoy time with family. I also know for a fact that baby boomers need space for their parents, since most senior homes have had serious cases of COVID-19.”
In many areas, more space was previously a commodity that families had to balance with their proximity to work, amenities (like restaurants and shops), schools, etc. However, teleworking is on the rise, now that teams have proven they can work effectively remotely, and some schools are even shifting to virtual sessions for the upcoming semester.
“As technology businesses dominate the labor market in the Bay Area, the implementation of work-from-home programs has changed the dynamic for housing needs. Many tech workers now recognize they can work remotely as productively, if not more so, than when they were going into an office every day. This has led many people living in urban centers to consider moving to more rural areas where they can gain access to larger homes (with home offices), more exterior space, and easier access to nature and parks,” Megan Micco, a broker associate with Compass in the San Francisco Bay Area reported.
Between the additional time spent at home due to shelter-in-place orders and closed businesses, and the evolution of telework opportunities, buyers are in search of ways to make home an enjoyable place to be all the time. They can’t rely on the amenities that city centers offer during times like these, and their buying decisions reflect that.
Overall, it appears that the countless hours we are all spending in our homes have begun to transform our understanding of what makes a home “livable.” With our new awareness that, even when the pandemic has subsided, we may spend more at home time than before,
“home” (or “homes” as is the case in Austin) has become a place where people need space to move and explore interests. Since home purchases are often one of the biggest decisions and commitments in buyers’ lives, this shift in buyer preferences may be here to stay. However, with the pandemic’s impacts all but settled, it will be a while before we can say with certainty how our industry has changed.