A new year often marks the beginning of a new life chapter. In the wake of the COVID-19 pandemic, more Americans are interested in purchasing homes. According to the National Association of Home Builders’ latest Housing Trends Report, survey responses show that the share of Americans who are considering the purchase of a home in the next 12 months increased in the fourth quarter of 2020.

The survey reports that interest among Americans who are considering purchasing a home increased by four percentage points higher than a year earlier. The change in interest represents the largest year-over-year gain in the three-year history of the survey question. The gain shows the coronavirus outbreak continues to impact Americans’ propensity to want to buy homes.

"The housing market is unlike any that realtors, lenders, or title companies have seen before. The continued low interest rates combined with COVID-19 lifestyle changes, like more virtual work, have created an enormous influx of buyers," said Brie Stephens of Lake Life Realty, a member of the Lakes Region Builders & Remodelers Association.
 
"The Lakes Region is seeing less than one month of inventory available, making it the strongest sellers' market in recent memory. Experts say a balanced market is approximately five to six months of inventory."

Millennials are the generational group that stands out in their intent to buy a home. Between the fourth quarters of 2019 and 2020, the share of millennials planning a home purchase rose eight points to 27 percent. The share increased six points to 18 percent among Gen Xers, three points to 16 percent among Gen Z, and was flat among baby boomers.

"We are seeing over 100 people attend open houses in a two-hour window, and more than 10 offers on average, with record low days on market," said Stephens. "We have never seen so many multiple offer situations. Some properties will go as much as $100,000, $200,000, even more than $250,000 over the asking price. And this is not just for waterfront properties, but single-family residential homes with no special amenities."
 
When it comes to first-time prospective home buyers’ the interest among different generations shifts dramatically. The share of prospective buyers who are buying a home for the first time declined slightly at the end of the year, except for boomers. Among the boomer generation, the share of first-time home buyers rose from 20 percent to 25 percent in the final quarter of 2020 compared to a year earlier. 

Geographically, the share of adults with plans to buy a home rose in all four regions during this period, led by the Northeast (up nine points to 19 percent) and the West (up six points to 18 percent). Across regions, significantly fewer prospective buyers in the Northeast (55 percent) are first-timers compared to a year earlier (65 percent). The share was flat in the West and changed slightly in the Midwest and South.

More than a third (37 percent) of perspective home buyers expect that finding the right home will get easier in the months ahead, compared to less than a quarter (23 percent) a year ago. The improvement in buyer perceptions on availability reflects the fact that more new and existing homes were sold in 2020 than any year since 2006.

"Many buyers have changed to renovation loans that are increasingly more popular for lenders. Buyers don't have the liberty to be choosy in this market, so if they don't see what they want, they are getting renovation loans to change and renovate the property to what they want upon closing," said Stephens.
 
"Land has been moving more than it has in many years as well. Since people cannot find what they want, they decide to build. The challenge is finding availability from those in the trades to build in a timeframe that works for the buyers," she added.

"Buyers however are realizing more and more that in this market, they must be patient whether buying, building or renovating."
 
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Greg Page is president of the Lakes Region Builders & Remodelers Association. To learn more about Lakes Region Builders & Remodelers Association, visit lakesregionbuilders.com.

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