COVID-19 Changed Home Buying Patterns Even as Sales Hit Record Numbers, Survey Finds
The COVID-19 pandemic had a major impact on home buying patterns over the past year, with about one-third of respondents saying they considered buying a home but ultimately decided against it, according to a new survey from mortgage provider ServiceLink.
The “ServiceLink State of Homebuying Report,” conducted in partnership with researcher Market Cube, surveyed 1,000 homeowners nationwide. Among its findings was that COVID-19 “dramatically shifted” the way people bought and sold homes.
“Like many industries, the real estate industry was forced to quickly pivot to adapt to social distancing, mask requirements and shutdowns,” the report said. “With market conditions and economic uncertainty, it is not surprising that more than half (55%) of those who wanted to buy this year, but ultimately didn’t, cited financial-related concerns as their reason (either options were too expensive or their financial situation changed). For those who did buy, upsizing (or the need for more space) was among the top reasons for many, likely as they shifted to working from home.”
Despite so many respondents choosing to forgo home purchases over the past year — and even in the face of record low housing inventory — demand overall was high. Total year-end sales volume for the year hit 5.64 million units, the highest level since 2006. The COVID-19 pandemic likely kept those numbers from pushing even higher. Eleven percent of survey respondents purchased a home in the last 12 months.
Although the pandemic came during a period of historically low interest rates, the survey found that many homeowners chose not to refinance for better terms. Meanwhile, lockdowns and social distancing measures forced many shoppers to use virtual tools and other technology — a trend that might keep growing even in a post-COVID world.
Among the other key findings:
- Of the survey respondents who bought a home, 36% did so to upsize from their current home, 32% bought as an investment and 23% needed more space to work remotely.
- One-third (33%) considered but ultimately decided against purchasing a home in the past year. Of those who didn’t buy, 34% decided to upgrade their own homes instead, 31% said housing options were too expensive and 24% said their financial situation changed.
- 32% are likely to purchase a new home in 2021.
- 43% financed their homes with cash/savings, while 42% financed through a traditional bank lender.
- 27% borrowed from their 401(k)s to finance their home, including nearly one in five (17%) of Gen Z/millennials.
- 30% of survey respondents refinanced over the past year. Half said they were unlikely to refinance in 2021.
As the year progresses, consumers “will have to be nimble and willing to adapt to the complexities of the market as interest rates and inventory are likely to fluctuate in the future,” the report concluded.
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