The home-buying process has always led to some level of stress, fear, and anxiety for home buyers — even without a pandemic. COVID-19 has taken these feelings to another level.
According to a survey of 1,000 buyers who purchased a home between January and May of 2020, one of their greatest concerns was the possibility of one’s home losing its value, even though prices have generally demonstrated stability so far.
We’ll cover some of the other COVID-related buyer concerns from the report and provide some tips and strategies for agents to best help clients manage them.
A strong economy paired with an incredibly low interest rate environment led to a housing boom in the U.S. following the 2008 recession. For context, average monthly home sales increased by 43% from 2008 to 2020, while home values increased by 23% over the same time frame.
Then, COVID-19 put everything on hold. Many pre-COVID buyers have lost significant portions of their household income and are facing unexpected financial hardships. Buyer demand, however, has held strong, while sellers are remaining cautious by keeping their homes off the market.
In an attempt to answer how the financial security and general outlook of recent home buyers has changed in the wake of a global pandemic, let’s revisit the survey of 1,000 homeowners who purchased their homes between January and May of 2020. The survey asked buyers about their current finances and mortgages along with how they felt about homeownership.
As an agent, it’s important to get a sense of how your clients are thinking and feeling at this stressful time in the world. Overall, recent home buyers have had very different feelings than those who purchased their homes before the pandemic. More specifically, home buyers who purchased after the pandemic began have indicated higher levels of buyer's remorse and more concerns about finances than those who bought between 2015 and 2019.
2020 home buyers are feeling stressed out
2020 home buyers are more than twice as likely to report feelings of anxiety, 1.6x times as likely to report stress, and nearly half as likely to say homeownership makes them feel comfortable and secure than those who bought in the last 5 years.
Buyers since COVID began are less likely to report feelings of comfort, security, happiness, and pride after buying a home than their pre-COVID counterparts. In addition, 2020 home buyers are 28% more likely to report having feelings of buyer's remorse than those who purchased their homes between 2015 and 2019
2020 home buyers are concerned about their finances
Roughly 75% of 2020 home buyers reported feeling concerned about paying their mortgage due to COVID-19-related financial hardships, and a whopping 58% of recent homeowners were concerned about going upside down on their mortgage.
On top of this, 55% of 2020 home buyers reported that at least one person who typically contributes financially to housing costs had lost their job since purchasing their home.
Signs still point toward a seller’s market
In spite of COVID-19 fears, it's still a seller's market — 42% of homeowners who bought during the pandemic reported entering a bidding war.
Get used to virtual tours
About one-quarter (23%) of home buyers who bought during the pandemic reported never entering the home in-person, only viewing photos or doing a virtual tour.
With many cities across the country entering lockdowns again, real estate virtual tours aren't going anywhere anytime soon.
Early 2020 buyers most worried about making their mortgage payments
Interestingly, those who purchased a home in January and February of this year are more concerned (63%) about going underwater on their mortgages than those who bought during the pandemic from March to May (53%).
Although the results of this report are pretty intuitive, it’s helpful and meaningful to see the hard data if you’re an agent. Knowing that prospective buyers are feeling more stressed than they are happy is immensely useful in understanding how to best serve your clients.
How can you, as an agent, help buyers and sellers understand the current climate and best advise them? How can you make your clients comfortable that it’s still a good time for real estate?
Share third-party resources with your clients
There’s really no such thing as too much information-gathering when it comes to digging into a home purchase.
As an agent, you can only say so much, and you want to avoid coming across as biased. There are a lot of great websites for home buyers and sellers that will help them understand the market. For example, Zillow and Trulia have forecasting tools to understand how the market will fare over time, and online landlord tools can help your investor clients automate their property management (and focus on closing new deals you’ve uncovered).
Put the low interest rate environment into context for them
Help educate buyers about the historically low interest rate environment and what it means for them.
If your client is looking for a place to call home for a while, this may be a good time to lock in that rate through a fixed mortgage. Many people got burned back in 2008 by adjustable-rate mortgages. Having fixed monthly payments for the long term may help with some of the uneasiness associated with COVID-19 and the economy.
Manage expectations around timing for sellers
Make sure that sellers understand that it’s going to take a little bit longer to sell their home than it normally would, but that prices have been resilient during COVID, as demand has remained strong while supply has not kept up. It’s generally good to be part of the short supply!
Manage expectations around timing for buyers
On the other side of the coin, this also means that your buyer clients need to understand that they will need to remain patient as they look for a new home.
With demand outweighing supply, expect it to take longer than normal. Also, even though affordability is more in reach due to the low interest rate environment, it’s going to be more difficult and take longer to find the right home. Make sure your clients understand that going into it.
Tell your clients about rebates
A lot of this comes down to preparation and education. In a period of extreme uncertainty, it’s your job to share as much information with your clients as possible in order to help them make the best decisions for their futures — both during and after the COVID-19 pandemic.
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