August 6, 2020
Redfin, Seattle, said three-quarters of homebuyers who plan to buy a home within the next 12 months say the coronavirus pandemic has changed their homebuying plans.
Another 25 percent of homebuyers surveyed said the pandemic has caused them to move and/or speed up their moving timeline, 20 percent said it has caused them to delay their plans to move and 17 percent are now looking for a less expensive home.
“Somewhat counterintuitively, the coronavirus-driven recession is propping up the housing market,” said Redfin Chief Economist Daryl Fairweather. “Homebuyer demand is surging despite GDP taking a historic nosedive in the second quarter, largely because Americans value the home more than ever and are willing to prioritize housing even as they cut back on other expenses. Additionally, the Fed is using low interest rates to stimulate the economy, which is giving buyers more purchasing power and boosting home sales.”
But even with low rates, widespread unemployment and financial uncertainty mean not everyone who wants to buy a home is able to, Fairweather noted.
Redfin reported sixteen percent of respondents said the pandemic has caused them to want to move and 15 percent said it has caused them to move sooner than originally planned. Six percent of respondents chose both options, resulting in a total of 25 percent of homebuyers who said the pandemic has caused them to want to move and/or speed up their moving timeline.
Turning to home preferences, the pandemic’s most common impact on homebuyers is a desire for more space. More than 20 percent of respondents said they want a designated area to work from home and the same share want more outdoor space. Additionally, 10 percent of respondents said they now want a bigger home, and 7 percent want a designated space for their children to learn from home.
Low mortgage rates and spending more time at home are driving forces for people who are moving for pandemic-related reasons. Of the people who said the pandemic is causing them to move or move sooner, 55 percent said low mortgage rates are a factor in their changed plans, the most common response. Just over half (52 percent) said spending more time at home is a factor, and 40 percent said working from home is contributing to their desire to move. The average 30-year mortgage-interest rate was 2.98 percent when the survey was fielded, the lowest in history until that time.
The large share of Americans looking to move as a result of the pandemic is one reason the housing market is booming despite high unemployment and an uncertain economy, Redfin said. Recent indicators of homebuying demand reflect the competitive landscape: pending sales were up 12 percent year-over-year in the four weeks ending July 26; the median sale price was up 11 percent year-over-year for the week ending July 26–the biggest increase since 2014; and more than half of Redfin offers faced bidding wars for the third consecutive month in July.