The pandemic has changed consumer housing preferences. With remote working becoming the norm, buyer housing demand is slowly evolving. Results from the California Association of Realtors 2020 Annual Housing Market Survey show since the coronavirus outbreak, Realtors saw changes in homebuying behavior and consumers' reasons for buying. Multiple offers continued this year even amid the constraints of the pandemic. This year continues to be a good year for sellers, especially for those who have owned their home for at least five years or longer.
"The pandemic has surprised many of us in real estate. Many sections of the economy have been hard hit, but the real estate industry has seen a rebound since March when homebuying practically came to a halt. COVID-19 appears to have affected buyer behavior in ways we would never have imagined a year ago, especially with work from home trending," said Mary Kay Groth, president of the Silicon Valley Association of Realtors.
More than two of five Realtors (43.6%) who responded to the C.A.R. survey saw a change in buyer preferences in the type of property they want to purchase. Of those changes, 39 percent of Realtors said their buyers are opting for a larger home; 35 percent said buyers want more rooms in a home; 37 percent said buyers are less concerned about the commute time to work; 37 percent said buyers are opting to live in a suburb rather than a city; and 26 percent said buyers want to live in rural areas rather than cities or suburbs.
This year, the share of total sales of vacation and second homes rose to the highest level in four years. The flexibility of working from home and away from metropolitan areas motivated homebuyers to relocate to resort communities in search of more space and a healthier lifestyle.
With the cost of borrowing at record lows, buying a home appeared to make more sense than renting for many first-time buyers, while repeat buyers desired a larger home. The top three reasons homebuyers purchased a home remain the same as last year. A quarter (25%) of buyers bought because they were tired of renting, and one of five (20%) bought because they desired a larger home. Another one-fifth (19%) bought because they desired a better location.
The average number of offers reached their highest levels since 2013. Nearly two-thirds (59.2%) of homes sold in 2020 received multiple offers at an average of 4.8 offers per home. In 2019, less than half (47.7%) of homes sold received multiple offers with an average of 3.9 offers on each home.
A bigger share of properties was sold above their asking price in 2020. Over a third (35.5%) of homebuyers paid more than what home sellers asked for this year, compared to a quarter (26.7%) in 2019. In fact, this year's level is the highest in seven years and is 16 percent higher than the long-run average.
Market competition varied between price segments. Mid-priced range homes ($500,000 to $1 million) were the most sought after with 67.3 percent receiving multiple offers. They also received the most multiple offers (6 offers), were the most likely (37.3%) to receive an offer at or above the asking price, and sold the fastest (10 days).
More homes sold above asking price. Home sellers typically had a net gain of $210,000 from their home sale, a 63.8 percent increase from the purchase price. Sellers who lived in their home for less than five years typically earned a 16.5 percent profit from their sale, while those who lived in their house five or more years typically earned a 100 percent profit.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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