Introduction
Homeownership used to be an achievable signifier of having reached the American Dream. Today, it’s more of a luxury, out of reach for many Americans. Supply and demand—the most foundational tenet of economics—is the simplest explanation of why the 2020 coronavirus pandemic triggered an unbelievable spike in the national real estate market. After an initial drop in the market at the start of the pandemic, Americans fled cities to more spacious suburbs, resulting in a shortage in supply and a spike in prices. As the effects of the pandemic on real estate started to become more apparent, Insurify conducted a survey of American homebuyers in 2021 to better understand the trends and effects of the past year’s roller-coaster market and what they indicate about the future of home-buying. Here’s what we found.
Methodology
Insurify conducted an online survey of 1,000 Americans who were currently or recently involved in the home buying process. The survey was fielded using a market research tool on July 27, 2021.
Respondent Profile
The findings of this survey come from a wide array of Americans across the geographical and socioeconomic spectrum. Here are their demographics.
Respondents skewed slightly Female (55 percent) compared to Male (45 percent)
A fifth of respondents reported an annual household income of over $150,000, or income level 7 (20 percent).
Most respondents were between the ages of 35 to 44 (37 percent)
Respondents came from all around the nation, with the most representing the South (36 percent). Others responded from the West (16 percent), the Southwest (1 percent), the Midwest (19 percent) , and the Northeast (20 percent).
What were your original motivations for purchasing or wanting to purchase a home?
Key Findings:
Most respondents cited similar reasons for why they initially sought to purchase a home of their own.
The appeal of a new location (44 percent ) and the cost of living in a new location (42 percent ) were the most common reasons selected.
COVID-19 (34 percent) is another commonly-cited motivation for purchasing a home.
Comparatively, more traditional life-changing events, such as marriage, divorce, and having children, played a more minor role in the decision-making process.
In your recent or prospective home purchase, did you move into or out of a city?
Key Findings:
During the height of the coronavirus pandemic, people fled cities in search of more space to spread out while in quarantine.
The most significant proportion of respondents reported moving from a city to a suburb (30 percent) and from one city to another (29 percent). This could be correlated to the cost of living motivator in the previous question, where people were looking for more affordable housing in different cities or suburbs.
The move from suburb to the city was highest among 18- to 24-year-olds, with 26 percent of respondents moving in that direction.
Moving out of the city was highest among older groups; about 31 percent of those 25 and older who moved did so from the city to a suburb.
First-time homeowners were the majority of those who moved out of the city (30 percent), while those who had previously owned a home tended to stay in the city or the suburbs, wherever they previously were.
High-income individuals and families took COVID as a reason to move between cities or to leave them altogether for the suburbs.
In your recent or prospective move, did you/will you be moving to a different state or staying in your current state?
Key Findings:
While most respondents reported staying in their current states, a significant portion moved states.
Respondents age 45 to 54 were more likely to move states (53 percent). Other age groups were more likely to stay.
Higher-income families moved states at a much higher rate than both middle-income and lower-income households. One possible reason for this could be that white-collar workers had a much easier time working remotely due to COVID-19 than people with lower-wage jobs.
First-time homeowners were also more likely than previous homeowners to move states (48 percent). This could be due to first-time homeowners’ willingness to relocate possibly for more affordable housing options.
Did you or would you be willing to buy a house if you had only seen it virtually, not in person?
Key Findings:
The survey’s most surprising finding was that the vast majority of respondents either would be willing to or did purchase a home sight unseen, having viewed it only virtually (65 percent). This was certainly a symptom of the pandemic but still a shocking turn from what was previously considered normal.
Older home seekers were much less willing to buy a house they had viewed only virtually.
Lower-income home seekers were much less likely to buy a home they had toured only online, while high-income seekers were much more willing to do so.
Those who had previously owned a home were also less likely to view a home after seeing it only virtually.
The competitiveness of the market has made it necessary for buyers to act incredibly fast. Unconventional, yes, but it seems that the convenience and ease of online open houses could be here to stay, even after the effects of the pandemic pass.
How many houses did you tour before making your first offer?
Key Findings:
With the unpredictability of the housing market, homebuyers reported viewing a small number of homes before making their first offers.
The average number of homes toured across all demographic brackets was 1–4 (43 percent). This may be due to the competitive market and speed with which houses are being sold.
Just three years ago in 2018, the average buyer v isited 10 homes over 10 weeks before making their first offer. The drop in the number of houses toured before making an offer is indicative of the brutality of the current market, which does not allow for buyer pickiness.
What barriers do you think are holding you back from purchasing a home?
Key Findings:
Survey respondents cited various barriers preventing them from being successful with their home-buying efforts.
The most commonly reported barrier was home prices are too high (52 percent).
Respondents reported that cash for a down payment (42 percent) and cost of living in desirable areas (31 percent) were also putting homeownership out of reach.
The competitive market is making finding a home within a budget that meets the needs and desires of the buyer nearly impossible (44 percent).
Even still, of the 37 percent of respondents who reported that they had not yet been successful in their home-buying journey, optimism remained, regardless of these barriers.
Conclusions
Home-buying trends have changed dramatically over the past few years. Some changes were due to the challenges presented by COVID-19, but others are a result of the changing needs and expectations of buyers. Buyers are willing to purchase houses after touring them only virtually and forgo inspections to beat out competitors. Low interest rates have made borrowing money easier, opening opportunities for some buyers, but intense competition is driving up prices across the country. Despite some homebuyers being shut out of the market, optimism remains high. But buyers must remain patient and expect the process to take longer than it used to. The seller’s market remains intact, as many Americans hold off on their home-buying dreams.
About Insurify
Insurify is America’s top insurance quote comparison marketplace, offering users comparison tools for home, auto, pet, life, and health insurance. Insurify is on a mission to empower consumers to take control of their purchase decisions by breaking down confusing jargon and presenting all the options available. Insurify’s interface makes insurance shopping simple, affordable, and hassle-free.
