Nationwide small inventory, coupled with extremely high buyer interest and rock-bottom interest rates has created a very strong seller’s market—especially in Idaho. But that hasn’t stopped people from wanting to move a buy a new house in the coronavirus-generated real estate buzz. So are the drivers of moving and buying a new home the same as 2020?
We are still riding the wave of real estate buying that COVID-19 set off in the middle of 2020, but there is one standout trend we noticed on top of that. Here are the 4 drivers of buying a home in 2021.
Record-low interest rates
Just like in 2020, rock-bottom interest rates are the main driver of people looking to move in 2021. 30-year fixed interest rates are 2.79% as of writing this blog. This has caused a wave of people looking to save hundreds of dollars a month on their mortgage payments by either buying a new home or refinancing. In addition, the Forbes reports that a little more than 50% of new home buyers are Millennials looking to enter the market as first-time homebuyers. In addition, this is the beginning of the largest wealth transfer in history as older generations (particularly Baby Boomers) are downsizing, moving into elder care facilities, or passing away. With interest rates as low as they have ever been, younger first-time homebuyers are using that as the catalyst for buying a home.
Working from home
It now goes without saying that a large percentage of workers who were able to keep their jobs during 2020 were working form home at least part-time, if not for the foreseeable future. Some of these employees are working from home on a permanent basis. These workers have taken this opportunity to move to places that suit their lifestyles better, have a more agreeable climate, better internet connection, or are cheaper to live.
More outdoor space
With the perks of being to live somewhere better suited to you, working form home, and having the warmer months fast approaching, many people are looking to get outside more on their property. For many, this means having a bigger backyard, or even acreage to get out and enjoy the amazing Idaho weather. Neighborhoods that are less dense and/or have larger property sizes are in higher demand than usual.
This was a surprising trend we saw coming out of this real estate boom that we don’t see going anywhere any time soon. Rather than negotiate over concessions for home repairs in an existing home, buyers trying to get a foothold in the crowded Boise market would rather build a new home that perfectly suits their needs. The National Association of Realtors report that 44% of current homebuyers would rather buy or build a new home in order to “avoid renovations or problems with the plumbing or electricity” .
For sellers, this indicates that it would be wise to make the repairs and take care of any deferred maintenance that an inspector or appraiser would find. This will help raise the overall value of your home, and will make your home more attractive to buyers who don’t want to make any large fixes. Before 2020, buyers were already willing to pay a bit more for a house that has had a lot of work done recently. In 2021—thanks to low inventory and high buyer demand, resulting in multiple offers and bidding wars—sellers can realize a higher return on investment (ROI) on these home improvement projects than ever before.