Although the presence and effects of COVID-19 still linger with us today, the housing market was still ablaze. Despite many stories of an abundance of offers and waived inspections, a new report brought to light that this was not the expected homebuying experience.
Across the nation, the typical homebuyer in 2021 made two (2) offers before having one accepted, and it is estimated that a total of 88% of buyers chose to have an inspection done before closing on their home. This new research comes on the heels of a year that saw some homes receive upwards of one hundred offers – and some homes selling for hundreds of thousands of dollars over asking price – as a massive pool of buyers competed over historically low inventory.
However, this is in no way an indication that purchasing a home in 2021 wasn’t difficult. Prior to 2021, homebuyers simply had to submit a median of one offer. As an interesting point to note, the share of first-time homebuyers plummeted to 37% in 2021, down from 43% in 2020.
“Our 2021 survey of buyers found buying a home got more challenging in the past year, but many buyers were ultimately successful in landing a home without taking unnecessary risks,” said Manny Garcia, a Zillow population scientist, in a press release announcing the research. “Most buyers continue to get inspections, and sellers appear to prioritize higher offers over waived inspections. Most buyers are ultimately achieving homeownership by doing their research, making trade-offs, and considering a diverse array of options.”
Despite having the number of virtual tours increase dramatically during the earlier stages of the pandemic, most buyers still opted to complete a private tour of a home before putting an order in according to Zillow. A typical buyer went on three (3) private tours before making an offer, while just 5% of buyers skipped a private tour entirely.
In a press release, Tom Toole, team lead at Tom Toole Sales Group at RE/MAX Main Line said, “So many buyers are hearing horror stories from friends and family about the housing market, so it’s important to educate buyers about the local market so they can make the best decision for their family.” He further added, “buyers still strongly prefer in-person tours, but virtual tours help people see a home if circumstances don’t allow and have helped a number of buyers get a speed advantage in the market. Virtual tools are a great addition to help buyers decide what houses they want to go see in-person.”
What that means is that despite the robust desire for in-person tours, 68% of buyers also agreed that virtual tours helped them get a better feel for homes as opposed to just photos. Approximately 61% said they wished more listings had 3D tours, and 61% expressed wanting to schedule in-person tools online.
Some other interesting findings from the research found that:
- 72% of buyers said that a life event influenced their decision to move. The most common life event was a change in household or family size, with 42%, followed by working remotely more often, at 30%.
- About 60% of homebuyers said low mortgage interest rates influenced their decision to buy. Roughly 50% of buyers said having enough saved up for a down payment influenced them as well.
- An estimated 84% of buyers said a home within their initial budget was very or extremely important, tied with air conditioning and followed closely by having their preferred number of bedrooms.
All of this helps provide a renewed perspective on the state of the housing market as more points indicate it cooling, but slightly. Fewer homes are selling for more than their initial list price, with 46.1% of homes selling for more than their initial list price in August 2021 (down from 47.2% in July).
That doesn’t mean housing prices are going to come down soon. In many parts of the country, the housing market continues to remain burning hot, but some national indicators are showing early signs of balancing according to Redfin Economist Taylor Marr.
There are even more signs that the market is slowly turning, with new home listings exceeding pre-pandemic levels earlier in July.
What do you think this means for the future state of the housing market for buyers?
Sound off in the comments and let us know!