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Real Estate Big Data

Austin real estate will still be hot post-COVID, just different

(REAL ESTATE BIG DATA) While Austin real estate has gone through some changes in the pandemic, commercial and residential markets are still hot with no signs of slowing down.

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Austin real estate shown in the skyline of the Texas city.

The Austin, Texas real estate market looks set to be just as hot post-COVID-19 as it was before the coronavirus pandemic—though it may look a little different.

In October, the Austin Business Journal convened a panel of experts to discuss the future of real estate in the Texas capital. These included Sean Bukowski, the owner of the Bukowski Law Firm, Investors Alliance Inc., President Diana Zuniga, Affordable Central Texas CEO David Steinwedell, Presario Ventures Principal Darin Davis, and Sabot Development Managing Partner Jim Young.

Despite COVID-19’s adverse effects on the economy, the residential real estate sector has continued to remain hot, with industrial space booming as well.

According to the Urban Land Institute’s annual report, Austin is the second-best real estate market in the country going into 2021, though it did hold the top spot in the institute’s previous reports. That doesn’t mean the Austin real estate sector has come away completely unscathed from the pandemic, however, as leasing seems to be an area of concern.

“In terms of leasing, leasing just came to a screeching halt. We had several good prospects for our building — it’s 123,000 square feet and by April everybody was just on hold.” Zuniga said, “A few people now are stirring but the transaction volume overall, if you read the reports, is really down.”

Downtown offices are also feeling the current effects of the coronavirus. Zuniga stated that the latest surveys found office buildings downtown to be “running at 20% capacity” at the moment. This would affect not only the businesses who are leasing downtown area buildings but the restaurants and retail spaces who make a large part of their revenue from the office crowds. Although many experts on the panel believe that the sector will rebound, it will most likely be with different companies that are there currently.

“The downside is that it’s likely going to be with a lot of different players than it was before.” Bukowski said when asked about the downtown area, “Because we represent a number of music venues, for example, and they’re not coming back anytime soon and probably not going to make it, unfortunately.”

Exactly what things will look like in Austin when the COVID-19 pandemic is over is anyone’s guess, but things are certainly shifting across the country—and Austin might not be immune.

Patrick Auger is a management consultant and entrepreneur who resides in Austin, Texas. He has a Bachelor of Arts in Business Management from Western Illinois University, and is the Founder and Principal Consultant at Auger Consulting Group, LLC. When he's not writing for The American Genius, he's writing about the business of Mixed Martial Arts for The Body Lock or learning how to cook, one burnt recipe at a time.

Real Estate Big Data

NAR Report: How the home search process has changed in 2020

(REAL ESTATE BIG DATA) The 2020 National Association of Realtors annual report examined the home search process, with buyers utilizing online tools and agents to help find the perfect home.

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Woman holding phone in lap, doing an online home search.

There’s extensive data and topics to research when it comes to the National Association of Realtors annual report – everything from the trust home sellers place in agents, home financing, home sales (naturally), and real estate professionals and their relationship with buyers. Practically every angle of this important market has been broken down and examined to help deliver a clear picture of real estate sales across the nation. It’s all extremely valuable and highly worth perusing (psst: search “NAR report”).

Of course, searching for a home is a pivotal and significant part of the entire process, and the NAR report has delivered an in-depth analysis of everything as well. Let’s take a look and see what current trends were revealed.

Initial Search

When it comes to looking for a home initially, there are two main options that most buyers tend to go with – searching online versus contacting outside help (primarily a real estate agent, but family and friends were also viable resources).

With the advent of the pandemic in 2020 keeping several people at home, online searches were at their all-time highest (though this trend has continued to increase in recent years). In fact, a staggering 97% of all buyers utilized the internet at some point during the process.

With the advent of the digital listings and databases, it’s been shown that 43% of buyers are first looking for properties online, compared to 18% that go to a real estate agent first. Speaking broadly, first time buyers were more likely to take this step first, and there was a direct increase as buyers were older (though this percentage decreases after the
age of 64).

First Step Taken During the Home Buying Process, First-time and Repeat Buyers

Real estate agents were definitely the second most used avenue during the search process, and this did increase with aging demographics as well. Perhaps due to greater familiarity with searching online, younger generations did look up information on buying their first home at a higher rate than older counterparts (13% with the younger group versus 6% with the oldest).

First Step Taken During Home Buying Process, by Age

Information Sources

Of course, when it comes to where to find information and best to listen to, real estate professionals reigned supreme (91% reported successfully being helped by agents), and were the primary resources for every demographic – first time buyers, repeat buyers, new homes, and previously owned homes. Online searches and open houses came second and third respectively, and yard signs and online video sites also saw a lot of utilization. Methods after this – print advertisements, billboards, relocation companies, and television sources – finished out the bottom, but there was a wide margin between them and other methods.

Information Sources Used in Home Search, by First Time and Repeat Buyers, and Buyers of New and Previously Owned Homes

Length of Time From Searching to Buying

Perhaps again owing to the nature of the pandemic, the average time a buyer used from search to purchase decreased (a first since 2014), needing only eight weeks. A median of nine homes were looked at (five online only).

First time buyers needed a little more time on average than repeat buyers (nine versus eight weeks). Agents were still utilized frequently in all instances, and were usually contacted within three weeks of the initial search.

Length of Home Search, by Region

Difficulty During the Process

It should come as no surprise that searching for a home is a massive undertaking, and can prove to be an arduous process given the magnitude of what it entails. Just finding the right home to purchase is seen as the most difficult step, with 53% of buyers saying it gave them the most trouble. Paperwork followed at 17%, while simply understanding the process from start to finish was cited by 15% of buyers. As might be expected, first time buyers reported more difficulty across the board in all areas than repeat buyers.

Most Difficult Steps of Home Buying Process by First Time and Repeat Buyers and Buyers of New and Previously Owned Homes

Online Searching Trends

Online searching was first examined in 1995, where only 2% of buyers would utilize the internet during their home search process. This increased repeatedly until 2009 to 90%, dipped slightly until 2012, and has since generally been rising. It was almost an even split between mobile and desktop devices, with younger buyers focusing more on mobile and older more likely to use a desktop/laptop.

Percentage of Time Using Devices in Home Search, by Age

There’s actually a lot of information to process when it comes to online search trends – married couples versus single buyers generally searched online more, desktop searches utilizing video sites more often than mobile (46% versus 40%), and mobile users generally finding their home through their online searches while desktop might generally direct buyers to complete the process with a real estate agent.

Value of Website Features

Of course, how a website helps direct a buyer is extraordinarily important to the home search process. Photos were the clear primary resource here, with 89% of buyers saying that images were extremely useful in the process.

Detailed information about properties followed at 86%, and then there was a significant jump to the next most important feature, as buyers reported that floor plans were important 67% of the time).

Value of Website Features

Next Steps After Searches

Once homes were found online that proved attractive, more than half of first (51%) and repeat (59%) buyers would proceed to walk through the home. Following this, buyers might then see the home but choose to skip seeing the inside (37%), or would contact a real estate agent for additional information (35%). First time buyers tended to look for more information in general (on the home itself, about mortgages, and so on) to better prepare themselves.

Actions Taken as a Result of Internet Home Search, First-Time and Repeat Buyers

Method of Home Purchases

Perhaps the best conclusion to draw here is the home purchase itself. When that time comes, agents are still used the overwhelming majority of the time regardless of a buyer using mobile or desktop more than 50% of the time. With the former, an agent helps 88% of the time, and 90% of the time otherwise. Builder agents or direct contact with the previously owner – known or not – are far overshadowed here.

Method of Home Purchase, by Use of Internet

Satisfaction with the Search Process

Given all of the tools and data available to buyers, 64% reported that they were very satisfied with the entire process, 30% were somewhat pleased, and the remaining group said they were unhappy.

Satisfaction with Buying Process

Conclusion

The NAR Report really shows an incredibly exhaustive look into the home search process. Generally speaking, with so much information available online, buyers were eager to search with devices first and speak with real estate agents early on in the process. Further, digital resources such as photos, floor plans, and other data proved incredibly useful in helping determine if buyers should seek out the home or continue their search.

Perhaps the best conclusions to draw here are that first and repeat home buyers are actively consuming data from online sources, but still rely heavily on agents to help guide them through the process (including ultimately with purchasing the home). Given the unique circumstances of the 2020 Pandemic, it’s clear that searches and next steps are best started through websites and other repositories, and are then usually followed with experts that can provide their professional experience. It’s likely that these trends will – on average – continue in ensuring years.

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Real Estate Big Data

Real estate myths created during the pandemic

(REAL ESTATE BIG DATA) Real estate is a finicky field, but the most popular myths surrounding the effects of COVID-19 on the market are purely unfounded.

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real estate myths

In the past six months, there has undoubtedly been a large amount of misinformation regarding the Coronavirus, its treatment, and the long-term ramifications of a pandemic–a phenomenon that has affected, among other industries, real estate. Courtesy of SFGate, here are a few myths you’re likely to experience in the current market.

The first mythand, arguably, the most prevalent oneasserts that selling your home amidst COVID-19 restrictions is a poor choice. In fact, the opposite is true: Danielle Hale, a real estate expert, explains that people have been able to sell at relatively high rates despite the pandemic. “As long as buyer demand remains strong, I expect the market to remain tipped in favor of sellers,” she adds.

Of course, both taking the proper precautions during showings and maintaining social distancing–along with affording buyers an appropriate amount of grace when settling on a closing date–are important attributes of making a successful sale during this time.

Another myth you’ll probably hear about is tangentially connected to the first–that home prices are declining, thus making it, again, a bad time to sell. This is simply untrue; Lawrence Yun of the NAR points to low mortgage rates, as well as a general lack of people selling during this time, as the culprit. It makes sense that people would want to protect their investments for the time being, after all.

Thirdly, and lastly in the buying-and-selling myth pantheon, you’ll find that people are actually buying houses more now than they were before the pandemica direct answer to the myth that buyers are hesitant to close on properties for now. Just like the last item, you can look to low interest rates and high demand as the justification here.

Then, there is the myth that you can no longer tour homes in person seems real enough, and it may be standard practice for some sellers; however, the majority of homes being sold in the United States, as of now, are viewable in personand, more importantly, with the viewer’s safety at the forefront of the seller’s endeavors. However, SFGate does point out that, due to rising cases in much of the United States, some of these restrictions may eventually return.

Finally, the myth that buyers are actively attempting to leave cities in favor of suburb living seems to be circulating as of late. SFGate acknowledges that this myth is “partly true”, but that doesn’t mean city listings aren’t availablenor does it mean city dwellings will begin to lose their value. After all, urban living has consisted of largely prime real estate for as long as any of us can remember, and the Coronavirus probably won’t outlast that allure.

The bottom line is this: Real estate, like everything else, has been affected by COVID-19but it hasn’t been completely turned on its head and wiped out like some may think.

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Real Estate Big Data

2020 NAR Report: Breaking down For Sale by Owner (FSBO) homes

(REAL ESTATE BIG DATA) The 2020 NAR Report analyzes how For Sale By Owner (FSBO) sales have been affected in 2020, and what that could mean going into 2021.

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Home owners browsing online for FSBO home selling

At the beginning of 2020, the housing market started off strong. While there was a nine-week downturn at the onset of the pandemic, sales resumed and have continued an upward trend through the rest of the year, resulting in higher prices (jumping 14.6%). This increased demand has been primarily driven by lower mortgage rates and employees working from home (which in turn means a reassessment of where people want to live, with many opting away from cities given that their personal choice is now more easily obtainable).

It has not been entirely beneficial at all times, however, with sales declining for the first time in six months, due to lower inventory and the aforementioned rising costs. Still, this suggests that the market has continued to flourish.

The National Association of Realtors began tracking various trends for home real estate in 1981 with a total of 59 questions designed to understand the market over a twelve month period from July to June. In doing so, a snapshot of the current landscape was obtained for that year, and this data has since been collected annually. Further, it has grown to include additional considerations, covering a massive 131 questions in the most recent 2020 report.

Of the numerous subjects covered, for sale by owner sales (i.e., without assistance from a realtor) are directly profiled. This FSBO information is collected here, and several insights can be gleaned with regard to this particular selling method.

As this report shows, there are certain circumstances that – when tracked across the entire survey – show positive outcomes. A quick example is that not having a previous relationship with the buyer yields higher selling prices and a smaller percentage of times where the asking price was reduced. Interestingly, data also shows a seller’s starting median income being higher than situations where there was a previous relationship with the buyer.

Let’s take a deeper look into this specific topic.

For Sale By Owner Sales Show Steady Decrease Since Inception
In 1981, FSBO sales accounted for as much as 15%, but this has declined gradually over time, accounting for only 8% in 2020 (though this is up 1% from the previous year). Additional analysis showed that these sales were evenly split between the buyers and sellers having a previous relationship versus not, with the latter as generally more advantageous toward the seller. Sales mostly came from suburban and urban locations (as opposed to recreational and resort territories).

FSBO and Agent Assisted Sales 2003-2020
FSBO and Agent Assisted Sales, by Location

Demographics Breakdown – Median Income
In comparison to agent-assisted sales, FSBO owners differ on a number of data points that are significant. For example, FSBO sellers had a median age of 57, which is just above agent-assisted sellers at 56. Further, their median income is over ten thousand dollars lower ($96,700 vs $108,300), which falls even further if an agent was used later in the process after an initial attempt at a self-sale ($79,000).

Interestingly, there is a correlation between higher median seller income when it comes to selling their home to someone where no previous relationship existed ($107,800 versus $84,200).

Characteristics of FSBO and Agent Assisted Sellers

Types of Homes Sold
The majority are detached single-family homes at 81%; there is a small dip to 78% (down from 82% in 2019) with regard to FSBO sales. The main differences here are that FSBO shows a lower percentage of townhouse sales (6% versus 3%) but an increase overall in mobile/manufactured homes (3% versus 9%).

We also still see differences when a previous relationship is not present – there’s an increase in townhouses and mobile/manufactured homes and a decrease in detached single-family. Otherwise, both groups are comparable.

Type of Home Sold, FSBO and Agent Assisted Sellers

Home Location
FSBO sales tend to skew slightly higher in rural areas compared to agent-assisted transactions, though there is a significant difference in resort/recreational sales for those who do not have a prior relationship.

Location of Home Sold, FSBO and Agent Assisted Sellers

Selling Price
Overall, FSBO sales result in a lower median price than with agents ($217,900 versus $295,000), but there has been an increase in the price over 2019 (rising up from $200,000). It’s worth noting that agents will take a percentage of the sale as commission (around 1%). In situations where an agent was employed after an initial attempt at a direct sale, the owner would receive 98% of the asking price, but usually had to reduce their listing before a deal could be made.

In short, this does seem to suggest that an agent’s knowledge of the market and skillset can benefit a seller.

Selling Price, FSBO and Agent-Assisted Sellers

Factors That Determined Selling Price
When settling on an initial listing, FSBOs who knew their buyers tended to focus on comparables in their area 41% of the time. Other methods trailed behind, such as appraisals (32%), profit needed by seller (29%), online evaluation tools (21%), and covering what was owed (15%). Those who did not know their buyer saw an increase when relying on comparables (56%).

How FSBO Seller Determined Asking Price of Home Sold

Length of Time on Market
One of the most important factors in real estate is the amount of time a home will be on the market until it is sold. In this regard, FSBO sales have a slight edge, with an average duration of two weeks (with agents having a median of three weeks). This is increased when the seller knows the buyer, with an average just under a week, rising by 6 points in 2020 to 52%.

As such, homes sold by FSBO tend to move more quickly, and knowing the buyer beforehand accelerates the process.

Time on Market, FSBO and Agent-Assisted Sellers

Remaining Factors – Urgency, Incentives
Compared to agent-assisted sales, FSBO tended to be less urgent overall, with over half saying they did not need to sell urgently regardless of knowing the buyer (52%) or not (64%). There was also a lower tendency to give incentives to the buyer in these conditions, as all FSBO sales offered nothing 85% of the time.

Seller Urgency, FSBO and Agent-Assisted Sellers
Incentives offered to attract buyers, FSBO and Agent-Assisted Sellers

Reason For Selling as FSBO
A majority of owners chose this route due to not wanting to pay a commission or fee, citing this reason as 41% of the time. Selling to a relative, friend, or neighbor was the next most frequent reason, covering 30% of all FSBO sales.

Regardless of why an owner was selling, there was almost always a large disparity between knowing the buyer versus not. This is most pronounced in situations where the buyer contacted the seller directly – 6% of sales versus 22%.

Most Important Reason for Selling Home as FSBO

Method For Selling
Interestingly, a majority of FSBO sales utilized no active methods for marketing their home at 46%, with a large discrepancy between knowing the buyer (68%) versus not (24%). Selling to a friend, relative, or neighbor occurred 22% of the time, while third party aggregators such as Zillow and Redfin were at 24%. Yard signs covered 25%.

When the buyer was not known, the owner relied much more heavily on third parties, social networking sites (such as Facebook), yard signs, and open houses. This would follow given that more work would need to be done to locate a buyer. We can see from the data that third parties are becoming more and more utilized when there is no prior relationship, which would tie into the real estate market becoming more intertwined with digital methods.

Method Used by FSBO Sellers to Market Home

What did FSBO sellers say?
While 8 in 10 successful FSBO sales reported being very satisfied with the process to sell their home. 53% reported that there was nothing truly difficult or arduous when it came to the selling process, which far outshone other reasons such as preparation, completing paperwork, price adjustments, and attracting buyers.

Most Difficult Task for FSBO Sellers

When they knew the buyer, 16% said they would sell their current home when the time arose, while 45% who didn’t know the buyer reported the same. This would suggest that this method is overall successful and attractive, despite that over a third reported not knowing what process they’d take with their current home.

How FSBO Sellers will sell their current home

Conclusion
Both types of sellers were overwhelmingly satisfied with the process they used to sell their homes, with 81% and 83% responding with “very satisfied.” Despite some of the perceived additional challenges and the foregoing of an experienced realtor, it suggests that FSBO works a large part of the time for owners.

FSBO Sellers Satisfaction Process of Selling Homes

With the advent of third parties and social networking, a greater wealth of knowledge accessible via the internet (looking up comparables, recently sold homes, guidance from other home sellers and realtors, etc.), and a rich inventory of resources available, home owners can conceivably move forward with selling their home directly and still enjoy positive results.

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