COVID-19 Creates Housing Boom

COVID-19 continues to stir the home real estate market and upset the plans of homeowners.

Despite the uncertainty in the overall economy, though, demand for homes is remarkably strong.

“Somewhat counterintuitively, the coronavirus-driven recession is propping up the housing market,” said Daryl Fairweather, chief economist for real estate brokerage company Redfin. “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.” 

The pandemic is causing homebuyers to rethink their plans and priorities. According to a Redfin survey, three-quarters of homebuyers who plan to purchase a home within the next 12 months say the pandemic has affected their plans. Of those buyers, 25% say it has caused them to move and/or speed up their moving timeline, while 20% say it has caused a delay in their moving plans and 17% say they’re now seeking a less expensive home.

Homebuyers’ preferences have also shifted due to the epidemic. Additional space is now a top priority—21% of respondents say they want a designated work area and another 21% more outdoor space. Additionally, 10% desire a bigger home.

What’s driving these trends are low mortgage rates and the amount of time people are spending at home during COVID-19. Of the respondents who say they’re moving because of the pandemic, 55% cite low mortgage rates as a key factor. (At time of the survey, the average 30-year mortgage-interest rate was 2.98%.).

So despite high unemployment and an uncertain economy, we’re seeing a housing market boom. For the week ending July 26, pending sales were up 12% year, and the median sale price was up 11%— the biggest increase since 2014. 

Of course, plenty of people are not in an economic position to move. Of those who are delaying their moving plans, 45% cite financial concerns.

“When the pandemic first hit, a few buyers canceled contracts due to economic uncertainty and concerns about potential layoffs,” said Phoenix Redfin agent Thomas Wiederstein. “I’ve also had some clients take breaks from searching because they don’t know how the economic situation is going to play out. But then there’s the other side, those who are encouraged by low mortgage rates, sitting around in their tiny apartment dreaming of the space a single-family home can offer.”