Wednesday, August 4, 2021 / by Hardy Real Estate Group
Homebuying and Homebuyer Criteria Post Covid-19 Pandemic
When deciding to buy a home, has the fundamental homebuyer criteria changed?
Since the coronavirus pandemic, the re-opening of nonessential businesses and interest rates remaining low, anyone who had a goal of buying in 2021, their criteria list would probably look a little different. Why? Location, Space, Timing/Decision..
Location has always been a huge factor in buying a home. Is the home in a good neighborhood? Is it in a good school district? Is there public transportation nearby? How far is my commute to work? You can change the house, but you can’t change the location. That is why the location has always been the biggest criteria to not compromise on. However, regarding the location and commute, that may not be a factor anymore. For people who want to, and can continue to, work from home as the pandemic eases, their commute is just steps from the kitchen, or maybe their desk is in the kitchen, and they can live anywhere in the country they’d like! That eliminates the traditional notion of “location, location, location” completely!
Buyer’s fundamental criteria included: location, size, style, home price, mortgage qualification (down payment, interest rate and monthly payment), to name a few. That criteria still is factored. However, location and working from home will be re-considered. Room count and space, add that to the top of the criteria list. Timing, and decision to buy, became an immediate question.
Remote work initiated by the pandemic but also the worldwide health crisis has impacted the trend of smaller places especially city living and home office space is now more important than ever on buyers’ criteria lists. Zillow reported in December 2020 that 48% more of its listings were featuring a “home office” or “Zoom room.” Space to get that home office was bumped up to the top of the list. And timing, can you even buy a home right now or the need to buy a home now became true. Many people were impacted whether it was putting their home search to a complete stop with a job loss or your plans to move to a different state all together was accelerated, the pandemic made many people re-evaluate their living situation completely.
Home buyers are now asking themselves these questions:
Location: Does the location of the home need to be close to work or in a good school district?
Working remotely, home schooling, you can work from wherever you are or attend school virtually with a computer. The location of your next home could really be wherever your heart desires.
Space and Room Count: Is there room in the house for an office, maybe two?
Work from home situations spurred by the pandemic are likely to continue for many American workers, at least in a hybrid format. Having an office or two for both family members to have designated separate space has become a necessity.
Timing and Decision to buy: Did your timeline immediately change, and the decision to buy was now?
With what felt like the world coming to a stop. Suddenly the plan to move out of the city or closer to family in the next few years became an immediate need. This reality kicked in for many people a couple months into the stay at home order. People sat tight for a while but with all that time indoors at home thinking and analyzing their current home size and living situations, it revealed what was important to them. That being, space & outdoor space, more rooms for an office, move to the burbs/or to a different state all together.
Buying a home requires consistent employment. If you and even better is you have a spouse or partner to qualify together, it can be attainable. Prior to the pandemic, another major consideration for homebuyers was the location of the new home relative to their place of work. But, during the pandemic, many people worked from home (if they were lucky enough to maintain employment). Twenty years ago, a good location for a home was close to work. But in 2020, working remotely became a necessity and a requirement. Like we said, the meaning of "location, location, location" has changed.
In Summer 2021, some companies welcomed back employees into safeguarded in-office environments, while some offered employees a hybrid of in-office and at-home situations. Still others, realizing they could exist and benefit from an all-remote work staff, are closing their physical offices, or reducing their office space significantly. So, in terms of your own work situation, you may not need to be near your office anymore. If you are only going to go into the office twice a week, how close do you need to be? And how solid is your current employment status? If making a home-buying decision based on location related to your employment situation, are you going to be staying in that position and with that company for a long time to come? Does that play into your decision to buy a home?
How Much Space & Rooms Do you Need?
Before the pandemic, your living space seem adequate. But when it became your office and where you spent the entirety of the day, it was necessary to create a viable work space in your home. Thus, the house suddenly became small. If you lived with someone else working from home, two work spaces were not only needed but scarce in most households. Battling conference calls and background noise from your kids & animals made it even more challenging to navigate. Your home became the place where you ate, slept, binge watched TV, plus your office. And, in some case, a classroom for children.
In 2021, the National Association of Home Builders reported more interest in larger homes — people wanted more space. Specifically, outdoor space. A lot of people decide to ditch the city life and move to the burbs. The unanswered question even today is, will your home be your office going forward? In addition to that question, will there be occasions where multiple people need to work at home at the same time? And if so, is one of you willing to use the kitchen or the basement or the garage as a makeshift office? If you are going to need more space in your new home in order to make remote employment situations work, you will need to balance your need for space and additional rooms with your budget for a mortgage. (Lucky for buyers that interest rates are low. It is unlucky for buyers that inventory is also low and sellers are reveling in higher prices.) That’s why we saw a lot of people moving away from the city to the suburbs, providing more space and an adequate amount of rooms to accommodate.
Timing is Everything; Decisions, Decisions, Decisions
With all of the above thoughts running through your mind, you have still another matter to consider, and that is timing. For many, this was the igniter that lit that fire for people to ultimately make that move. Most people had a general plan of, “we’ll move in a couple years from NYC back to the West Coast” or “we eventually want to be closer to family to raise our kids” but when the pandemic hit all of a sudden it was the right time to make that move and expedited their timeline.
On that same note, the decision to make that next move whether it was to a new destination or because the need for a bigger space where location and commute to work wasn’t the driving factor anymore, do you decide to buy? Although demand today far outweighs supply, giving sellers a financial edge over buyers, mortgage rates remain very low so buying power was in their favor and allowed the flexibility to be aggressive in this market. Acting quickly and immediate motivation expedited the decision to commit to their next chapter and doubled down to secure that financially wise investment of owning a home.
If you are going to need a mortgage to purchase your home, now is a great time. Shopping for mortgage rates online is an option and resource or ask us for a lender recommendation! The Federal Reserve board has indicated that there will be no federal interest rate increase until at least 2022! One thing seems certain: if you need to buy a home, and cost is a concern, now is the time to do so due to low interest rates. Home ownership remains a stable investment because the money you spend on rent could be used to decrease your mortgage and increase your true ownership in the property you have chosen while building equity! Mortgage rates are low — for now — but so is inventory, and in most areas that means prices are high. There are four financial questions you should answer before buying a house. So again, with all of the above said, how do you decide if it's the right time to buy?
The Good old pros and cons list. You actually need more than one pros and cons list (location, space, cost, transportation). And you need a list of priorities.
Do I need to buy a home now?
Is the pandemic causing me to make an impulsive decision or accelerate the timeline and not delay the inevitable of moving away from city life or to a different state?
Do I need to live in a particular location?
Am I going to be working from home, in an office or a hybrid situation?
How much space do I/we need?
Which of the above factors takes precedence?
The decision to purchase a home is one of the biggest of your lifetime. Due to the pandemic, fear of financial stability and job security, and remote working possibilities, not to mention the pandemic has impacted the market’s inventory and interest rates as we are still in the aftermath of it all...it has made the decision a complicated one. Consult with your Realtor to sit down for a buyer consultation and determine if it is the right time to buy for YOU. The consultation is an important step to not only get your finances in order, manage your expectations about strategy in today’s market, but also, this is where you will create your home criteria with what you are looking for. The Hardy Real Estate Group has a Home Search Buyer Criteria Form for your use if you are looking to buy in the greater Philadelphia area! Feel free to reach out, we are here to help at any stage!
**Sources included for this blog: thepennyhoarder.com by Kent McDill, shrm.org, federalreserve.gov, thepennyhoarder.com