The hot housing market fueled by Covid-19 has featured tales of dozens of offers and waived inspections — but a new report reveals that was not the typical homebuying experience.
The typical buyer nationwide in 2021 made just two offers before one was accepted — and about 88% of buyers had an inspection done before they closed on their home, according to new research from Zillow. The new research comes after a year in which some homes got more than a hundred offers — and some sold for hundreds of thousands of dollars over asking price — as large pools of buyers lined up to compete over historically low inventory.
But that doesn’t mean buying a home wasn’t harder in 2021. Before 2021, homebuyers just had to submit a median of one offer. The share of first-time homebuyers also dropped to 37% in 2021, down from 43% in 2020.
“Our 2021 survey of buyers found buying a home got more challenging in the past year, but many buyers were ultimately successful in landing a home without taking unnecessary risks,” said Manny Garcia, a Zillow population scientist, in a press release announcing the research. “Most buyers continue to get inspections, and sellers appear to prioritize higher offers over waived inspections. Most buyers are ultimately achieving homeownership by doing their research, making trade-offs and considering a diverse array of options.”
Despite the proliferation of virtual tours during the pandemic, nearly all buyers still took a private tour of a home before putting in an offer, according to Zillow. A typical buyer went on three private tours before making an offer, while just 5% of buyers skipped a private tour entirely.
“So many buyers are hearing horror stories from friends and family about the housing market, so it’s important to educate buyers about the local market so they can make the best decision for their family,” said Tom Toole, team lead at Tom Toole Sales Group at RE/MAX Main Line, in a press release. “Buyers still strongly prefer in-person tours, but virtual tours help people see a home if circumstances don’t allow and have helped a number of buyers get a speed advantage in the market. Virtual tools are a great addition to help buyers decide what houses they want to go see in-person.”
That means that despite the strong desire for in-person tours, 68% of buyers also agreed that virtual tours helped them get a better feel for homes than just photos. About 61% said they wished more listings had 3D tours, and 61% said they wanted to schedule in-person tools online.
The research also found that:
- 72% of buyers said that a life event influenced their decision to move. The most common life event was a change in household or family size, with 42%, followed by working remotely more often, at 30%.
- About 60% of homebuyers said low mortgage interest rates influenced their decision to buy. About 50% of buyers said having enough saved up for a down payment influenced them as well.
- About 84% of buyers said a home within their initial budget was very or extremely important, tied with air conditioning and followed closely by having their preferred number of bedrooms.
The fresh look at the housing market comes as more signs point to it cooling — slightly. Fewer homes are selling for more than their initial list price, with 46.1% of homes sold for more than their initial list price in August 2021, down from 47.2% in July.]
That doesn’t mean housing prices are going to come down in the near future. In many parts of the country, the housing market continues to remain red hot, but some national indicators are showing early signs of balancing, according to Redfin Economist Taylor Marr.
There are other signs the market might be turning, with new home listings surpassing prepandemic levels earlier in July, according to reporting by Ashley Fahey, real estate editor at The Business Journals.