As the era of COVID-19 dawned earlier this year, everything in the real estate business seemed to change almost overnight, including the business of being home sellers.
To identify how the pandemic is affecting residential real estate, the National Association of Realtors added a section to their “2020 Profile of Home Buyers and Sellers” that looks at how the data is shifting. NAR pulled out data on primary home sellers who closed from July, 2019, through March, 2020, compared with those who closed from April through June, 2020.
That means the pandemic dataset is based on just 3 months – likely not long enough to call something a major trend but long enough to get an idea of where things are likely to go.
Here are some trend takeaways based on up and down swings in percentages.
More sellers want more space.
People who sold primarily because they wanted bigger houses climbed 5 points to 18%, tying with the former top category of people who sold to move closer to family/friends. The quest for more space tracks with NAR’s survey of home buyers, more of whom wanted homes suitable for multiple generations to spend time with or take care of older parents or relatives.
Not evident in the buyers report is a desire for home offices as more people are able to work remotely, but that’s likely a factor for both buyers and sellers. In fact, work-related reasons for selling – job relocation and shortening commutes – declined by a combined 5 points.
On the flip side of space, people selling because their home was too large moved up a point to tie with family changes like birth of a child or marriage/divorce, which moved down by 3 points. Both are in the second spot at 11%.
Life changes were also reflected in health and financial reasons. There was a 3-point climb in people selling because their health had made the home too difficult to keep up or it had become too expensive. It’s worth noting that 3 months into the pandemic would cover the beginning of the economic impact, and this reason is likely to grow.
Sellers are feeling a growing sense of urgency.
By the end of June, concern over money hadn’t resulted in a wave of people needing to sell quickly. However, sellers who said they felt some urgency, but not the need to sell right away, climbed by 7 points. Those who felt they could wait for the right offer answered that with a 7-point drop.
The suburbs are hot. Small towns are not.
Suburban sellers were up 8 points, to 56%. Sales in urban areas/city centers increased slightly, but sales in small towns dropped 4 points. Rural areas showed an even greater decline of 6 points.
Numbers on buyers track that breakdown, with 57 percent of buyers reporting purchasing in suburbs/subdivisions, a 7-point climb. Urban areas/central cities were up by 2. Small towns were down 7, with a 2-point drop off for rural areas.
We’ve been reading for months now that pandemic-era buyers, especially those who can work remotely, are fleeing cities for suburbs and small, rural towns in the quest for more space, lower costs, and fewer people. NAR’s numbers may bear that out for suburbs, but not so much for small towns and rural areas – yet.
MLS listings and virtual tours got a boost. Open houses took a dive.
When it comes to how agents market properties, the big story is the rise of technology. While open houses fell by 12 points as concerns about exposure to the virus grew, virtual tours and video climbed by a combined 16 points. They still took a spot toward the bottom of marketing tools, however. Buyers are touring fewer houses, and virtual tours and videos will only gain in importance as marketing tools – suggesting agents and brokerages may have some catching up to do. (NAR has some ideas for that, too.)
MLS still reigns supreme, however. It even gained a little power as the percentage of sellers who listed their home on MLS grew by 6 points.
More incentives are on the table.
The percentage of sellers who offered no incentives to buyers declined 8 points, from 69% to 62%, suggesting more pandemic-era sellers are doing more to attract buyers. The percentage of sellers who sweetened the deal went from 31% to 38%, a 7-point hike. Home warranty policies and credit toward remodeling or repairs showed the most gains, at 5 points each. Sellers who offered no incentives were down 7 points.
Sellers tended to make more money as prices and equity increased.
The median number of years sellers had been in their home – 11 – stayed the same, but sellers who had lived there 21 years or more were up 6 points. Sale prices vs. purchase prices typically climbed 2 points: from $64,000, or 35%, to $80,000, or 37%. Homes in general got more expensive, with the median price moving from $270,700 to $300,000, but it was the $500,000+ homes that saw the most growth, with a 10 point rise. Not changing much: Sellers are still getting 99% to 98% of asking price.
It’s looking like residential real estate is trending toward growth rather than taking a hit from the pandemic, at least in most markets. For real estate pros, monitoring pandemic-era trends will be key to refining marketing strategies, identifying underserved niches and, especially, finding likely sellers.