February 3, 2021
Since the pandemic began last spring, surveys by the National Association of REALTORS® of its members have consistently identified bidding wars, an uptick in first-time home buyers, and the increasing desire for the suburbs and vacation homes as the top housing trends.
Buyer competition. As mortgage rates have dropped to record lows, home buying has surged. But the supply of homes for sale on the market is severely below buyer demand, which has resulted in fierce bidding wars for limited housing stock. REALTORS® participating in NAR’s REALTORS® Confidence Index Survey are reporting that there is an average of nearly four offers per sold property.
First-time buyers increase. First-time buyers are being drawn to the market due to the lower mortgage rates. The share of first-time buyers was 33% in 2020. But there could have been even more. “First-time buyers could have made a bigger entry with mortgage rates falling by nearly a percentage point in 2020, but rising prices made a home purchase less affordable,” Scholastica “Gay” Cororaton, a research economist for NAR, said in a post on the association’s Economists’ Outlook blog. “The lack of supply for lower-priced homes on the market and the higher down payment and closing costs that go with rising home prices likely kept potential buyers on the sidelines.” First-time buyers spend a median of $250,000, which is about 85% of the median sales price, NAR research shows. But with the supply so tight, many are stretching their budgets further. Read more: Bypassing the Starter Home: Delayed First-Time Buyers Are Going Big
Suburbs and vacation homes grow in appeal. As more people work remotely and otherwise freed from work commutes, they’re being drawn to vacation homes. Sales of vacation homes increased by 16.3% in 2020 over 2019. The share of vacation homes increased to 5.5% of overall sales in 2020, which is a higher share of total existing homes than in recent years.
The counties that have been the most popular vacation destinations, positing double-digit growth in home sales, are Lee, Fla.; Barnstable, Mass.; Horry, S.C.; Sussex, Del.; Brunswick, N.C.; Cape May, N.J.; Worcester, Md.; Camden, Mo.; and Crow Wing, Minn.
More real estate professionals also report they have a higher share of clients who live in the city who now want to purchase a property in the suburbs or a rural area.