After a full year of pandemic-induced activity, buyers and sellers are prioritizing family and friends during their house hunting process, according to the National Association of REALTORS® (NAR).
NAR recently released its 2021 Profile of Home Buyers and Sellers report, which highlighted an entire year of research on buyer and seller activity during the COVID-19 pandemic. The report found that a critical factor for moving among buyers and sellers was to be near their loved ones.
“Realtors® stepped up in a tremendous way during this pandemic—both in helping sellers list and sell properties, as well as in aiding buyers in finding their dream home during a time of such scarce inventory,” said NAR President Charlie Oppler.
Behind the quality of the neighborhood, NAR indicated that the second most important factor to buyers when choosing a neighborhood was the convenience to friends and family.
Sellers shared a similar sentiment. They also stated a desire to increase their living space as a close second for the top reason they wanted to move.
Forty-six percent of sellers traded up to a larger home, and 28% purchased the same size home.
Aside from historically low mortgage rates, lagging inventory and overwhelming demand fueling frenzied market activity, NAR indicated that the COVID-19 pandemic likely caused a decrease in how long people were staying in their homes.
“Home sellers have historically moved when something in their lives changed – a new baby, a marriage, a divorce or a new job,” said Lautz. “The pandemic has impacted everyone, and for many, this became an impetus to sell and make a housing trade.”
The report found that tenure in a home from ten years to eight last year, marking the most significant single-year change in home tenure since NAR began collecting such data.
A lull in available homes helped drive frenzied buying activity in 2021, as any homes that hit the market were snagged faster than they were in 2020. The amount of time for a listing on the market dropped from three weeks in 2020 to one week this year.
Sellers cited that they sold their homes for a median of $85,000 more than they purchased it, a jump from $66,000 last year.
Despite persisting affordability issues, first-time buyers accounted for 34% of all buyers in the market this year – up from 31% the year before.
However, according to Jessica Lautz, vice president of demographics and behavioral insights at NAR, surging home prices could be likely to keep straining new buyers.
“In the current environment, these buyers also face soaring rent prices and high student debt balances, which makes it extremely difficult to save for a down payment,” Lautz said.
Twenty-eight percent of first-time buyers reported that they used a gift or a loan from friends or family to make a down payment on a home, and 29% said saving for a down payment proved to be the most challenging step in the entire buying process.
The bump in home equity continued to be a boon for repeat buyers. The report found that 56% cited using equity generated from the sale of a primary residence toward their down payment.
Prices of purchased homes increased nationally to a median of $305,000 from $272,500 from 2020, with the most expensive homes found in the West. The most affordable homes were in the northeast.
Recent buyers typically purchased their home for a median of 100 percent of the asking price for their home. Twenty-nine percent of buyers paid more than the asking price for their homes.
Given the overwhelming buyer demand, only a quarter of all sellers offered incentives to attract buyers—down from 46% last year.
Regarding how buyers are looking for their homes, the report found that almost all buyers (95%) used online tools during their search process. For 41% of recent buyers, that was their first step.
Amid the boom of tech and digital tools used to find homes, buyers are still choosing to work with agents and brokers. The report noted that 87% recently used a real estate professional to buy their home, while 73% of buyers only interviewed one agent during their search process.
The value of relationships and referrals has been lost as nearly half (47%) of the buyers surveyed said they used an agent referred to them by someone they know.
Sixty-eight percent of sellers also found their agent through a referral from a friend, neighbor, or relative or used an agent they had worked with before to buy or sell a home.
To read the entire report, click here.