Buying Your Home in 2021 – Trends to Consider
Key Points
The COVID-19 pandemic has led to a rise in buyers looking for features such as multiple dedicated home offices and large yards.
While high home demand and low home supply is driving up prices, historically low mortgage rates are helping to offset some of the increased prices.
There are a few differences in the home buying process during the pandemic, but at this point, they are all things we have become accustomed to doing.
The COVID-19 pandemic confined us to our homes more than we have ever before experienced. Our homes had to serve more purposes than anyone could have imagined: home offices, remote schooling area and entertainment options — almost overnight. Needless to say, many struggled to adapt, as their homes simply were not designed to accommodate these arrangements. Buying a new home has become a top priority for many of our clients.
Buying a home is a major investment in time, energy and money. There are many factors to consider in normal times, let alone during a pandemic. If you are looking at whether or not to buy a new home, let’s review the current trends.
People Want More Space
If you are looking for more space, you are not alone. According to CoreLogic, medium-and-high-tier-priced homes have had faster pick-up in acceleration since the onset of the pandemic, compared to homes in the lower one-third of the price distribution. From March 2020 to February 2021, high-tier prices accelerated 6.2% compared to a 4.9% increase among the lower tiers.
More than just square footage, however, people want rooms. Property features that were once considered luxurious are now considered necessities. For example, many want two home offices, one for remote working and one for remote learning. Additionally, demand for homes with more entertainment features, such as an interior playroom, pool, or a large yard has grown.
Is Now a Good Time to Buy a Home: Weighing the Options
With the influx of interest, potential buyers are finding listed properties in short supply. According to National Association of Realtors (NAR), the number of existing single homes available for sale is at a nearly two-decade low. In February 2021, there were 1.03 million homes for sale (equivalent to around two months of supply at the current sales pace), down nearly 30% from one year ago. This does two things. One, it drives up prices and two, it forces some buyers to expand their search area.
According to the NAR, the median national price for an existing single family home in February 2021 reached $313,000, up 15.75% from one year ago. Luckily, historically low mortgage rates are helping to offset some of the increased prices. This makes financing the larger or high-end properties favored during (and potentially after) COVID-19 within reach for some people. If your job is secure and your credit scores are excellent, you are more likely to be able to take advantage of these low rates.
For buyers looking for a relative bargain, you may want to look at condominiums. According to the NAR, the median national price for an existing condominium in February 2021 reached $280,500, up 12.33% from one year ago. The relatively better performance of single-family homes in relation to condominiums suggest stronger demand for single family homes over condominiums.
If you are looking to move into an apartment in a multi-unit building, know that developers have been actively evolving apartment design to help keep tenants safer . Features include in-unit office space, reducing shared touchpoints (for instance, touchless elevators that utilize facial recognition), upgraded air filtration systems, common areas with retractable partitions, and individual unit entries where possible3.
Buying a Home During COVID-19: What to Expect
If buying a home during the pandemic has you a bit unsettled, you can rest easy. There are only a few differences, and they are all things we have become accustomed to doing. For example, the seller may require a verbal or written declaration stating you are not experiencing COVID-19 symptoms. Virtual tours and video conferencing let you see the home without physically going to it until you have narrowed down your choices.
Once a purchase contract is in place, home inspections and appraisals continue as usual in most cases. At the closing of the purchase, you might find that only the buyer and attorney or title officer will be allowed to be present.
You should also expect paperwork delays. Lenders are dealing with very high levels of transactions, and the final closing documents may not arrive until the last minute. For this reason, whenever possible, after verbally verifying wiring instructions, try to have the purchase funds sent a day in advance. Throughout the process, be prepared to utilize remote signing procedures and technologies.
If you are considering changing residences, we are here to guide you.