- 2021 Real Estate Trend Report: Moving into Modernity
- Summary of Key Findings
- The COVID-19 Effect: Homebuyer Breakdown
- Amenities on the Rise: Pandemic Preferences
- Buyer Behavior: It’s a Digital World
- Virtual Home Shopping: So Hot Right Now
- Home Sellers: They Want Modern Tools, Too
- Trends Transforming The Real Estate Industry Outlook In 2021
- 1. Millennials represent a large potential pool of first-time homebuyers ready to enter the 2021 market
- 2. Conventional loan requirements have gotten less stringent, making it easier to buy a home today than in recent years following the Great Recession of 2008
- 3. Foreign buyer investment is down due to tax law changes
- 4. Lower-priced homes are in high demand, often receiving multiple offers
- 5. Mortgage rates are expected to remain lower than five percent for the near future
- 6. Second-tier cities are experiencing significant growth as homebuyers search for more affordable buying options
- 7. Realtor.com reports that the hottest housing city markets are in Lakeland, Grand Rapids, Miami, Boston, Phoenix, El Paso, Chattanooga, Boise City, and Bridgeport
- 8. The competitive housing landscape has fueled amenity-rich apartments as a way to beat the competition
- 9. Home staging has become big business
- 10. Video marketing is here to stay
- Real Estate Industry Stats and Growth Projections in 2021
2021 Real Estate Trend Report: Moving into Modernity
Welcome to Opendoor’s National Real Estate and Consumer Trend Report, an in-depth look at today’s modern consumer and the behaviors of home buyers across generations in 2021. We gathered data in November and December 2020 from a total of 1,290 respondents across the U.S. who are planning to buy or sell a home in the next 12 months.
What did we find? The COVID-19 pandemic is still affecting when, where, why, what and even how people are buying homes.
And we dug into how different generations, from millennials to baby boomers, are shifting their views and preferences for home ownership.
As with many aspects of daily life, more of the home buying and selling processes have gone digital, and we anticipate that 2021 will bring even greater adoption of modern real estate experiences.
Summary of Key Findings
COVID-19 is still affecting all aspects of home buying: when, where, why, what and even how. Our data highlights major trend shifts among millennials, Generation X and baby boomers, shifts that we expect to last into 2021 and beyond.
Over one-third of home buyers report that the COVID-19 vaccine will impact their moving timeline.
About 32% of buyers say that the pandemic has influenced where they’ll choose to live, from big cities to the suburbs. 35% of millennials said they plan to move to a large city, whereas 33% of baby boomers said the suburbs.
Across millennials and Generation X, the most frequently cited reason for buying a new home was lifestyle changes caused by COVID-19, coming in slightly ahead of the top reasons we usually see getting married or having a baby.
The amenities that people are looking for in homes have shifted as a result of COVID-19, with home offices, kitchens and outdoor entertaining spaces all increasing in importance. This change in preferences was especially pronounced in millennials.
Since the pandemic hit, more people than ever are turning to digital solutions for all of their needs, and real estate is no exception.
A full 75% of home buyers report that they would be ly to consider buying a home through a company that empowers them to control more of the process with digital tools.
But baby boomers are turning to tech even more than millennials when it comes to touring homes—92% of baby boomers said they want virtual options even post-pandemic, compared to 85% of millennials.
It’s not just home buyers who are changing things up—sellers are also eager for new digital options, too. 71% of sellers said that they were ly to consider selling their home to an iBuyer.
Check out more of our findings below
The COVID-19 Effect:
Overall, 30% of buyers believe that the pandemic will “significantly” impact their home buying process. How? 32% indicated COVID-19 has influenced their choice of where to live. And 36% said the timing of the COVID-19 vaccine will impact their moving timeline.
Amenities on the Rise:
Since almost everyone has been spending more time at home, our little nests have become more important than ever. And certain amenities— home offices and outdoor entertaining spaces—have seen skyrocketing demand. Millennials homebuyers have shifted their wants the most. Whereas baby boomers’ pre-pandemic preferences have remained relatively more constant.
Across all generations, the features that have changed the most relative to pre-pandemic preferences are home offices, kitchens and outdoor entertaining spaces.
When it comes to home-style preferences, our data shows that Modern and Ranch styles are the most coveted across generations. Specifically, 40% of both millennials and Gen X look for Modern style homes, and baby boomers prefer Ranch. Colonial, Cape Cod and Mid-Century Modern ranked the least popular across generations.
It’s a Digital World
In addition to when, where, what, and why people are buying homes, we’re also seeing a shift in how buyers are approaching purchasing their next place.
The pandemic dramatically shifted consumer behavior, with more people than ever turning to digital solutions for everything from ordering groceries and shopping to banking and doctor visits. The real estate market is no exception; on-demand and online is becoming the new norm.
In fact, a full 75% of home buyers report that they would be ly to consider buying a home through a company that helps consumers control more of the process with digital tools.
The most appealing aspect of digital tools? All age groups agree: saving money. Many also find it very appealing to manage the whole process digitally and on their own schedule without pressure.
When it comes to the actual home buying process, virtual touring options are here to stay.
Baby boomers may be perceived as being less interested in using technology compared to millennials, but, in this case, our data says otherwise. Our hypothesis is that the added convenience of seeing more aspects of a home without having to leave your couch is worth any perceived technological hassle.
Virtual Home Shopping:
So Hot Right Now
Though it seems everyone is indulging, millennials take the cake for domestic daydreaming frequency: 30% of millennials are 3x more ly to report that they browse homes on real estate apps multiple times per day compared to baby boomers at only 10%.
Even among people who aren’t planning to buy until next winter, 74% of them still report digitally browsing homes at least once per week. And 94% of people are doing so who plan to buy a home in six months’ time.
Virtually browsing for homes is also one of the first steps people make in their home buying journey. Most don’t even involve an agent.
And when it comes to actually purchasing their dream home, 35% of baby boomers are far more ly to put down 26% or more on their next home, compared to 11% of millennials and 14% of Gen X, who said they’d put down less. Only 54% of baby boomers report that they need to save for a downpayment, which is far fewer than the 82% of Gen Xers and 93% of millennials who report needing to save up before dishing out that much cash.
They Want Modern Tools, Too
It’s not just home buyers that are changing things up. Our survey shows that home sellers are also eager for new digital options.
Methodology: Opendoor collected data from 1,290 people—660 buyers and 630 sellers—across the U.S. planning to buy or sell in the next 12 months. The data was collected via Qualtrics from November 30 – December 11. For the purpose of this report, millennials are defined as ages of 24-39, Generation X is defined as ages 40 to 55 and baby boomers are defined as ages 56 to 74.
Trends Transforming The Real Estate Industry Outlook In 2021
1) Real Estate Trends 1.3) 3. Foreign buyer investment is down due to tax law changes. 1.9) 9. Home staging has become big business. 1.10) 10. Video marketing is here to stay.
2) Real Estate Industry Stats and Growth Projections in 2021
Economists pay close attention to the real estate market as a major indicator of economic news.
While real estate growth in late 2019 has slowed down some, it is still a healthy market that is prospering – we see real estate signage all over the neighborhoods. When navigating the real estate market, certain trends and statistics are worth mentioning.
1. Millennials represent a large potential pool of first-time homebuyers ready to enter the 2021 market
74 million millennials comprise a huge demographic of consumers ripe for buying their first home, surpassing the impressive number of baby boomers who burst onto the home buying scene in the 1970s and 1980s.
Forbes reports that the average household income of this group of potential homebuyers is $88,200.
Considering that the average group of homebuyers from this generation is now of age earning a decent salary, many economists believe that millennials offer salvation for a slowing home market in 2021.
2. Conventional loan requirements have gotten less stringent, making it easier to buy a home today than in recent years following the Great Recession of 2008
Underwriting guidelines have loosened a lot making it easier to buy a home today. The way conventional lenders have encouraged home buying is by lowering the down payment required along with the credit scores to qualify. Lenders are also allowing for higher debt levels. Many borrowers who were turned down in the past can now obtain a mortgage through conventional lenders.
Given the upswing of rental prices, first-time homebuyers in particular benefit from lower down payment requirements and more liberal debt ratios. While getting a mortgage loan is not as easy as it may have been prior to the Great Recession that started in 2008 or so, the mortgage landscape is much more welcoming today than four or five years ago.
3. Foreign buyer investment is down due to tax law changes
Since the new tax laws came into effect in 2018, many foreign buyers have stopped purchasing homes in luxury marketplaces such as New York and California. A majority of these buyers were from Europe, China, and Latin America.
Politics do have a significant impact on the real estate investment market in particular. Another reason for the foreign investment slowdown can be attributed to China’s earnings and income figures cooling down. Tariff policy and the political mood of investors play a role in foreign demand.
4. Lower-priced homes are in high demand, often receiving multiple offers
While higher-priced home sales have slowed, lower-priced homes have not. With millions of millennials finally ready to enter the market and buy a starter home, this demand keeps the competition steep.
Another contributing factor to a shortage of modest homes is that older people are deciding to stay in their homes longer.
The New York Times reports a decrease in housing inventory, with the number of affordable homes falling by eight percent.
5. Mortgage rates are expected to remain lower than five percent for the near future
Low and stable mortgage rates stimulate the real estate industry. While it is impossible to know for sure how long this trend will continue, there is little evidence that the rates will spike, especially since we’re approaching a major election.
HBI reports that both the Mortgage Bankers Association and Freddie Mac economists expect the 30-year mortgage to average between 4.3 and 4.4 percent for the remainder of 2019. This is good news for the real estate industry that is extremely sensitive to mortgage rates. There is nothing that discourages homebuyers’ enthusiasm, rising mortgage rates.
6. Second-tier cities are experiencing significant growth as homebuyers search for more affordable buying options
Forbes reports that the trend of looking to secondary options instead of spending so much in major housing markets is expected to continue through 2021. Many major corporations have driven this trend by relocating corporate offices to affordable locales. An example of this type of recent move is Toyota moving California to establish a Dallas office.
7. Realtor.com reports that the hottest housing city markets are in Lakeland, Grand Rapids, Miami, Boston, Phoenix, El Paso, Chattanooga, Boise City, and Bridgeport
The cities that are hot in real estate in 2021 can change status quickly as market conditions shift. A seller’s market can become a buyer’s market almost overnight.
8. The competitive housing landscape has fueled amenity-rich apartments as a way to beat the competition
Today’s finest multifamily developments boast movie theaters, communal gardens, laundry service, and even coworking space in many cases.
9. Home staging has become big business
Decluttering is key for getting the best price for your home when it is time to sell. There is proof that sellers get substantially more if they stage their home.
10. Video marketing is here to stay
Buyers expect to see videos of the homes they want to buy. Thus, video marketing and virtual tours are a necessity.
Real Estate Industry Stats and Growth Projections in 2021
Statistics serve as evidence of trends and can be used for planning purposes. Whether you are an investor, homebuyer, home seller, real estate agent, or broker, you can learn valuable information from reviewing key statistics. Below is important information for anyone involved in real estate.
1. Carrot predicts that millennials will be responsible for 20 million additional households in the U.S. by 2025.
Plagued in early adulthood by poor job prospects, crippling student debt, and a devastating recession, millennials are finally coming out from under the many challenges that made it difficult to buy their first home. Now in their late twenties and thirties, this large group of consumers is poised to become a sizable economic force in the 2021 housing market.
2. HousingWire cites CoreLogic’s prediction that the U.S. housing market continues to cool, growing more slowly in 2021 in pricey housing markets.
Home buying Institute cites Zillow’s prediction that home values will increase 4.1 percent in 2021, slowing from a 6.6 percent rate over the previous year.
Home prices have simply gotten too expensive for the majority of buyers in high-end markets, which explains part of the reason for lower sales figures.
While price gains are generally viewed favorably by investors, eventually, they are forced to align with market conditions that will always respond to supply and demand levels.
3. current findings, Forbes reports ATTOM Data Solutions’ conclusions that prove that renting is a more affordable alternative in 59 percent of housing areas, with purchase prices becoming unaffordable as they outpace wages in 80 percent of housing markets.
While rental rates generally trend upwards in housing markets where purchase prices are rising rapidly, they are still considered to be a more practical alternative for many buyers anxious about paying too much for a home in a hot market.
4. HousingWire published that 44 percent of renters surveyed claim that high rental rates create a barrier to homeownership.
If you are paying a large percentage of your income for rent, it is much more difficult to save money for a down payment to buy a home. Even the best loans with lower down payments still expect buyers to show they have some reserve money saved for unexpected expenses that can arise.
5. The National Association of Realtors found that an estimated 50 percent of buyers used the internet to search for a home, with that number increasing to 93 percent for people under 36 years old.
The market is changing, and buyers are looking to the internet to get the information they need. This insight is invaluable for listing agents searching for the best way to promote their clients’ properties for sale.
6. Carrot reports Mashvisor findings that claim sellers receive offers for 98 percent of the asking price on average.
Contrary to popular belief, the real estate deals that people brag about are overstated. While there is no doubt that some lucky buyers pay less than market value, the fact is that sellers are currently getting close to the asking price since the limited inventory on the market makes it almost impossible to drive a hard bargain.
7. CNBC reports that staged homes sell for an average of 6 percent higher than the listing price.
Buying a home is an emotional purchase. The statistics don’t lie. Staging a home to look its best translates to a higher selling price.
8. Smart with your Money reports typical buyers to look for a home for 10 weeks and view an average of 10 homes before buying.
It is always nice to have some idea about what to expect as a real estate agent. This data sheds some light on typical buyer behavior, so new agents know what the norm is when buyers begin shopping for a home.
9. Carrot reports that homes sell 68 percent faster using drone aerial photos.
Drone aerial photos can showcase a property in a way that regular photographs can’t. Specifically, properties with an impressive footprint show well from overhead.
10. Carrot found that 70 percent of sellers want to list with an agent who uses video marketing for promotion purposes.
Video is the future. Societal norms have changed as consumers tune into Netflix and , preferring videos to mundane written data. Smart real estate agents who use videos will reap better results.
The real estate industry is filled with optimism in 2021 despite a slower growth rate. With mortgage rates predicted to remain lower than five percent, the demand for housing is expected to continue.
Millennials entering the market are driving the demand for starter homes while prices are starting to cool down for luxury homes.