The 2020 housing market was one for the record books. Stay at home orders sent many office workers home to work remotely, driving many to reconsider their living situations. According to the National Association of Realtors’ (NAR) February 2021 existing-home sales report, national housing inventory at the end of January was 1.04 million units, down 25.7 percent year-over-year. The NAR report also states that the median existing-home sale price was $303,900, up 14.1 percent from a year ago, but existing-home sales continued to increase in January, to a seasonally adjusted annual rate of 6.69 million, up 0.6 percent from the prior month and 23.7 percent from a year ago. And according to Freddie Mac’s historical mortgage rate data, the 30-year mortgage rate at the end of January 2021 was 2.78 percent, down 0.73 percent from the end of January 2020.
So what does all this mean? The data shows that people are moving in droves. Mortgage rates are dropping, but lack of supply is driving prices up.
NAR’s 2020 Profile of Home Buyers and Sellers indicates that buyers who purchased a home after March were more likely to relocate to the suburbs and were more likely to pay more for that home, regardless of its location. Those who bought a home during the pandemic are expected to remain there for 10 years, compared to 15 years for those who purchased prior to the pandemic.
Five percent of buyers who purchased after March did so without seeing the home in person, compared to 3 percent of buyers who purchased before April. Ninety-seven percent of buyers searched for their home online, up from 93 percent the prior year. The time spent looking for a home declined to eight weeks from 10, which is the shortest search since 2007.
The NAR report shows that owners who sold in 2020 were more likely to say that their need to sell was “at least somewhat urgent.” For the second consecutive year, sellers cited their desire to be closer to friends and family as their top reason to sell. This trend is higher for those moving farther away, while those moving closer are more likely to cite their desire for a larger home. Those who closed in April or later were more likely to sell because their home was too small — 18 percent compared to 13 percent of those before April.