Pandemic Led Many to New Home Dreams

Consumers continue to believe that homeownership is the American dream, and the pandemic may have provided consumers with more time to ponder what that dream would look like for them.

Over a quarter of Americans—29%—say they have been more likely to think about pursuing their dreams since the pandemic began, whether that is making a housing move, pursuing a passion project, making a career change, or expanding their family, according to a new survey commissioned by Coldwell Banker Real Estate LLC of 2,000 U.S. adults.

When it comes to finding a home, location and lifestyle tended to be top-of-mind. Eighty-seven percent of respondents said it’s important to them that the location of their home—whether rural, suburban, or urban—aligns with their lifestyle.

Not all Americans’ dream homes look alike. The top dream home locations, according to survey respondents, were split among:

• Locations with warm weather: 33%
• Suburban areas with ample space: 28%
• Remote and off the beaten path with a large plot of land: 25%

Is a Dream Home Practical?

Forty-six percent of homeowners surveyed say they are unsure of the current value of their homes. They may not know if the dream home is obtainable. Some are relying on real estate websites with a home value estimate calculator as a first step before contacting a real estate agent.

In fact, survey respondents say that if they were looking to sell, they would seek a real estate website with a home price estimate calculator as their initial step in the process, according to the survey. Still, 60% of respondents said they would trust a licensed real estate agent to accurately estimate the value of a home over an online valuation tool.

For those who do want to press ahead in their homebuying dreams, they are face a limited selection. Two-thirds of potential home buyers say they haven’t found their dream home; the percentage is highest among Gen Z and millennials.

Why Moving Dreams Remain High

Compared with a similar survey conducted last fall, respondents showed more willingness to take a pay cut or accept a new job with a lower salary if it meant they could move to a more affordable location, according to the Coldwell Banker survey. The “Great Resignation” could be a wild card for the real estate market, and housing affordability and cost of living are factors weighing on more Americans, the survey found.

Forty-four percent of American homeowners who plan to sell their homes in the future want to move to a different city or state. But they aren’t moving on a whim, the survey says. They’re prioritizing the following factors:

• Quality of life (lifestyle and environmental elements): 94%
• Housing affordability: 93%
• Cost-of-living affordability: 93%
• Job market strength: 70%

Coldwell Banker says it created the Move Meter with such criteria in mind. The tool allows consumers to compare various price points to evaluate a move from one place to another, such as weighing housing affordability, quality of life, job market strength, and living affordability. Source: Coldwell Banker

©National Association of REALTORS®
Reprinted with permission

Homes Worth $1 Million or More at Record High

Higher home prices mean that more are valued above the $1 million mark. The number of homes that are $1 million or more has nearly doubled since before the pandemic began, according to a new study released by Redfin.

Nationwide, 8.2% of homes—or 6 million—were valued at $1 million or more in February—a record high, Redfin reports. That is up from 4.8% prior to the pandemic just two years ago.

Anaheim, Calif., has seen the largest jump in that home price bracket, with 55% of its housing stock now worth $1 million or more—up from 27% two years ago, according to the study. That also is the first time Anaheim has passed the 50% threshold in its market for such prices. Meanwhile, San Francisco continued to have the most overall properties worth at least $1 million.

“The surge in housing values has turned many homeowners into millionaires, but has pushed homeownership out of reach for a lot of other Americans,” says Taylor Marr, Redfin’s chief economist. “Incomes have increased, but not as fast as home prices, which means many people are stuck renting or have to move somewhere more affordable if they want to buy a home.”

Home prices have climbed rapidly due to high housing demand and a limited number of homes for sale. During the four weeks ending Feb. 27, the number of homes for sale fell 50% compared to two years earlier and is at an all-time low.

Where $1 Million–Plus Homes Are the Most Prevalent

Seven of the top 10 metros for $1 million-plus homes are located in California, according to Redfin’s analysis. The housing markets where you’ll find the most homes worth $1 million or more are:

• San Francisco: 88.7% of homes were worth at least $1 million in February
• San Jose, Calif.: 85.9%
• Anaheim, Calif.: 55.3%
• Oakland, Calif.: 55.1%
• San Diego: 40.4%
• Los Angeles: 38.5%
• Honolulu: 37.1%
• Seattle: 36.5%
• New York: 32.1%
• Oxnard, Calif.: 31.2%

Source: “A Record 8% of U.S. Homes Are Worth at Least $1 Million,” Redfin (March 9, 2022)

©National Association of REALTORS®
Reprinted with permission

Will Multigenerational Living Lose Traction?

As home prices continue to rise, housing experts see an ongoing effort by extended family members to pool their money to combine households and save on costs. But data suggests that rising home prices do not correlate to multigenerational living, according to a new analysis from LendingTree. Some current multigenerational households may be temporary due to the pandemic, the study’s authors suggest.

LendingTree researchers defined multigenerational households as three or more generations who live in the same home.

“The long-term impact that the pandemic will have on multigenerational households is still unclear,” says Jacob Channel, LendingTree’s senior economic analyst. “With that said, while some people may have opted to move in with family during the height of the pandemic, that doesn’t mean that they planned on staying in a multigenerational home forever. … It does appear safe to assume that even with the disruption to usual housing arrangements caused by COVID-19, multigenerational households won’t suddenly become the norm in the U.S.”

Multigenerational households did increase during the onset of the pandemic. LendingTree’s analysis covered the timespan between 2014 to 2019, but data since the pandemic started has shown an uptick in demand. Eighteen percent of buyers between the ages of 41 to 65, many of whom fall within the Generation X age segment, purchased a multigenerational home during the past year, according to the Home Buyer and Seller Generational Trends report published in 2021 by the National Association of REALTORS®. The most common reason for those who purchased a multigenerational home was to take care of their aging parents.

Multigenerational living may be more common in certain states. For example, Arizona, Nevada, and Colorado have posted the largest increases in multigenerational households over the past five years, according to LendingTree’s analysis. Between 2014 to 2019, multigenerational households have risen by an average of 12.34% across the three states, according to LendingTree’s research.  https://e.infogram.com/_/gJCjHUk0336vL1VQc0Aq?parent_url=https%3A%2F%2Fmagazine.realtor%2Fdaily-news%2F2022%2F03%2F09%2Fwill-multigenerational-living-lose-traction&src=embed#async_embed Source: “Even in the Face of Rising Home Prices, Multigenerational Households Haven’t Spiked in Popularity,” LendingTree (March 8, 2022)

©National Association of REALTORS®
Reprinted with permission

Novice Sellers

With soaring home prices and high demand, homeowners are finding it a great time to sell. But some sellers—particularly first-timers—may be so caught up in the headlines about the rosy market that their expectations may become clouded.

Real estate professionals shared with realtor.com® some of the mistakes of rookie home sellers in the current market:

Unrealistic price expectations: It’s a seller’s market, but that doesn’t mean a sky-is-the-limit pricing strategy will still work. “First-time sellers often erroneously believe that the list price means the desired purchase price,” Lindsay Reishman, founding partner at The Reishman Group in Washington, D.C., told realtor.com®. “In fact, the list price simply indicates an approximate appropriate price, and its purpose is to drive interest in the property.”

Accepting the highest offer: Buyers can make some giant bids to beat out the competition, but those offers can fall apart. Real estate pros say sellers can become so focused on a number that they overlook the reliability of a bid. Home offers can fall apart for a number of reasons, including financing, appraisals, or inspections. “In this market, it’s not uncommon for a buyer to submit an offer for a home, sight unseen,” Deborah Ann Spence, a broker at Fierce Real Estate Corp. in Bala Cynwyd, Pa., told realtor.com®. “Then, if the buyer doesn’t like what he eventually does see, the offer can be withdrawn and the property is likely to lose traction.”

Trying to FSBO: “For sale by owner” may be tempting to homeowners who believe the seller’s market offers them an opportunity to DIY their home sale. However, the FSBO route could limit the home’s exposure to larger pools of buyers since FSBOs can’t be listed on the multiple listing service. Also, even if the home does get buyer attention, a real estate agent by the seller’s side is critical to navigating the process and paperwork and sorting through multiple offers.

View more common slip-ups of first-time home sellers at realtor.com®. Source: “8 Things First-Time Home Sellers Often Get Wrong in Today’s Crazy Market,” realtor.com® (March 9, 2022)

©National Association of REALTORS®
Reprinted with permission

Americans Fear Even Higher Rental Costs

Rents have been climbing higher and higher, and Americans have felt it in their wallets. A record number of Americans say they expect rents will rise even more over the next year as well, according to a newly released Fannie Mae survey.

Sixty-nine percent of respondents said rental prices will rise. Consumers expect rents to increase by 7.1% over the coming year.

“Persistent increases in asking rents will eventually push up the average rent of the entire stock of units on the market,” the Federal Reserve Bank of San Francisco wrote in an economic brief last month.

The median rent for a one-bedroom apartment rose to an all-time high in February, according to Zumper’s National Index.

The National Mortgage News reports that rents can be a lagging indicator in the Bureau of Labor Statistics’ consumer price index. Most renters don’t see a change until their lease is renewed or they relocate. So many tenants may not have yet experienced the worst of the hikes in asking prices, they note.

Rents in New York jumped 33% between January 2021 and January 2022, according to data from the online listing site Apartment List. That is nearly double the national rate and the highest increase of the 100 largest cities tracked by Apartment List.

“We’re seeing that rents have returned and basically surpassed where they were pre-pandemic,” Nancy Wu, an economist with StreetEasy, a real estate website, told The New York Times.

Nationwide, rents rose nearly 18% in that period, according to Apartment List’s data. Researchers found that even cities that didn’t see a significant decline early in the pandemic, such as in Tampa, Fla., and Phoenix, have still seen large jumps in rents.

Many renters may be aspiring home buyers. But they may be feeling priced out there, too. Home prices have been rising by double-digit percentages over the past year. Forty-six percent of consumers recently surveyed in February said they believe home prices will continue to rise over the next 12 months, and 67% expect mortgage rates to increase as well, according to a separate Fannie Mae consumer sentiment survey. Source: “Record Share of Americans say Rents Will Keep Rising This Year,” National Mortgage News (March 7, 2022) and “Rents Are Roaring Back in New York City,” The New York Times (March 7, 2022)

©National Association of REALTORS®
Reprinted with permission