While the pandemic changed consumers’ daily purchasing habits over the past year, from more restaurant take-out to fewer live in-person events, how did the pandemic affect larger purchases like homes? According to the National Association of Home Builders’ (NAHB) latest Housing Trends Report, survey responses show that home buying interest increased amid the pandemic in the third quarter of 2020. It’s no surprise that we see that same interest in Clark County.
Homebuying ramped up throughout the second half of the year. Among the 13% of American adults considering a future home purchase in the third quarter of 2020, half (50%) have moved beyond planning and are actively trying to find one to buy — compared to less than half (44%) a year ago. The COVID-19 pandemic and record-low mortgage rates are likely contributors to this increased activity. The jump in interest primarily comes from a majority of millennials (58%), adults 24 to 39 years old, and Gen X (52%), adults 40 to 55 years old.
Home buyer perceptions also changed in terms of the ease in searching for a home. More than one-in-four prospective buyers (28%) in the third quarter of 2020 expect their search for a home to become easier in the months ahead, while a majority (61%) expect it will be harder or stay the same. By contrast, a year earlier, fewer buyers (21%) expected availability improvements and more (68%) thought it would be difficult to search for a home. Strong new and existing home sales in the summer of 2020 may have been a factor contributing to buyers’ improved expectations for housing availability.
Buyer perceptions will likely shift again in 2021 due to a decrease of affordable housing options. It’s no surprise that the COVID-19 pandemic has impacted scheduling and subcontractor availability, but it’s also contributed to the rapid increase in the price of lumber. Those variables combined with the recently implemented Energy Code updates will have dramatic impacts on perceptions of availability and affordability. Based on NAHB and Building Industry Association of Washington (BIAW) estimates, these variables will add an additional $36,148 to the cost of a newly constructed home. Unfortunately, for every $1,000 increase in the cost of a home, 985 potential buyers are priced-out of the Clark County housing market.
As the number of active buyers searching for a home increases and the cost of constructing homes skyrockets, we can also expect the length of time spent searching for a home will continue to grow. According to NAHB, in the third quarter of 2020, 62% of buyers actively engaged in the purchasing process have spent three months or more looking for a home, compared to 58% a year earlier. In Clark County, our inventory is at an all-time low at less than one month of availability at all price-points except under $200,000 and above $1 million.
As the pandemic continues in 2021, we can expect the demand for purchasing a home to continue.
Dave Myllymaki is the current president of the Building Industry Association of Clark County and owner of ReNew Creations. He can be reached at firstname.lastname@example.org.