How the Pandemic Changed Buyer-Seller Behaviors
Coronavirus and shelter-in-place orders have changed buyer preferences on housing size, space, and location. Seller motivations are changing, too.
The coronavirus pandemic and shelter-in-place orders changed our lives and perspectives about work, socializing, and housing. Your home is your safe space and likely your largest asset, so this uncertain time may be a huge source of worry, especially if you’re thinking about buying or selling a house.
The real estate market took a hit due to the virus. A Gallup survey taken at the height of the pandemic showed that a historically low number of Americans felt it was a good time to buy or sell a home. But the long-term impacts of COVID-19 on housing are just beginning to take shape.
Relocating, retirement, and ‘urban flight’
As the post-pandemic future of the economy and housing market unfolds, we’re starting to see interesting shifts in consumer behavior. Homeowners are rethinking how much space they need and where they’d like to retire.
High market areas such as Silicon Valley are experiencing an “urban flight” as remote work becomes the norm. Paying a premium to live in the heart of the tech world may no longer make sense.
The threat of new cases
Here are some ways the pandemic is causing homeowners to change their buying and selling behaviors. Some factors are based on a recent survey from NAR (National Association of Realtors). The survey polled over 3,000 of its members, asking about the impact of coronavirus on the market.
Making difficult decisions sooner than later
Concerns from coronavirus are causing some to make quicker decisions now rather than later. Even if they had plans down the line to move, the pandemic increased pressure to make the hard decisions now. Why wait, goes the thinking.
The virus brought a few unique considerations into focus that may be motivating this urgency:
- Relocating to be closer to family members. The difficulty of being separated from loved ones, and the worry of getting sick are constant reminders of what’s most important.
- Moving to a less expensive city to save money. The economic shockwaves of COVID-19, particularly for household members who’ve lost their jobs, invite many homeowners to seek more affordable places to live.
- Life changes such as divorce, death, and a growing family. Whether by coincidence or causation, times of crisis tend to bring on huge lifestyle changes.
Remote work is likely here to stay
Companies like Twitter, Facebook, and Square have announced that employees can work from home forever. One report revealed that 99 percent of workers expressed the desire to continue working remotely indefinitely.
Many workers are viewing the shift towards work from anywhere as an opportunity to downsize and live in less expensive areas.
Once highly desirable metropolitan locations that appealed to workers for proximity to the office, public transportation, and city life may no longer have the same appeal.
Workers see cramped urban apartment dwellings as subpar options for a home office or raising a family. Months inside during a viral outbreak also renewed demand for outdoor space. The preference for a better quality of life with more space and bang for your buck are prompting the decision to relocate.
Some consider moving back to their hometowns to be closer to their families. Others who are nearing retirement are eager to leave expensive big cities. Many are tapping their home equity to fund a comfortable lifestyle in more affordable states like Nevada or Idaho.
Motivating factors to sell
Those who own more than one home are looking to sell so they can get rid of having a second mortgage and have more cash in their pockets during this turbulent time. Landlords and homeowners who list their homes on Airbnb face declining demand for both long- and short-term rentals. They’re now deciding whether it’s a good moment to sell.
Finding reliable renters may pose a challenge at this time, plus some landlords would rather cash out while they can, since one in five workers are now unemployed.
Some Airbnb landlords simply don’t want to deal with the hassle and unpredictability of hosting travelers. The travel industry has suffered since the shelter-in-place mandate was issued in March. Airbnb, which was on an IPO trajectory this year, laid off 25 percent of its workforce.
A desire for more space
With shelter-in-place forcing people to be home, space has become even more apparent. This is another driving factor that may cause residents to make the shift out of the city to homes in the suburbs.
Whether these are renters who want to buy or homeowners looking to sell and upgrade, stay-at-home orders may have shifted their timelines on when to move.
Specifically, renters are more averse to living in multifamily apartments due to physical distancing and health concerns.
For those with small kids, urban housing during shelter-in-place means being cooped up in a smaller space. For parents who value their sanity, suburban life may suddenly seem more appealing, since there’s more space and the kids can play outside.
Those who can work from home permanently now need more space for an office setup, which may be easier to find in suburbia.
What’s the longer term impact and what can we expect to see in the future?
These shifts in wanting more space, moving out of big cities, and the desire for a home office will likely outlast the current crisis. Some experts predict that by 2025, 70 percent of the workforce will work remotely at least five days a month.
With changes in work culture, people who want to buy may have more options for where they want to live and can now consider less expensive areas outside of the main city. This will have profound changes on real estate.