If you look at a lot of waterfront advertising, you see a commonly used phrase – “buy your boat a home.” Now with COVID-19 influencing almost everything in our lives, pretty soon you’re likely to see this phrase, “buy a yard for your Zoom.”
There has been a lot of chatter, including in this space, about the trend of big-city dwellers giving up their small expensive apartments and hitting the trail for the suburbs or moving out of state. Now that owning a single-family home is back in vogue, it’s also realigning itself as one of your top assets.
Since the 2008 financial crisis burst the housing bubble, it’s taken a long time for housing values to return as well as housing preference to return for younger generations. It took COVID-19 to bring both those aspects of the housing market back into play, pushing up values as a new generation is looking at single-family homeownership as an appreciable asset and a more comfortable form of shelter.
The COVID-19 housing bubble that some economists are worried about is different, however, than the one that built up before 2008. This one is driven by the need for more working space to accommodate working and learning remotely for now and for many going well into the future, in addition to recognizing the personal liabilities of living shoulder to shoulder with strangers and the ability to expand geographically where you live and where you work.
The housing bubble prior to 2008 was based strictly on making good investments and turning a quick profit. Homeowners used their homes as cash registers, maxing out their equity, and investors bought up new construction and resales with an eye to flipping for profit – not a place to live. This housing expansion has firmer legs as buyers are literally changing not only their residences but their lifestyles.
Because of this trend, buyers have a different list of wants for their homes, per a survey done by Redfin. The top item they’re looking for is space to work from home and space for children to learn from home, generally a larger home in all areas. They also want more recreational space and a yard, and if they’re giving up their city life they want to pay less. All of this change comes with a more workable floor plan, which now includes gathering areas for the family who may all be working individually in their respective spaces.
Summing up Redfin’s survey of home buyers, 21% of buyers want space to work from home, another 21% said they want more outdoor space and 7% said they want a place for children to learn from home. This is substantially different from the formal dining rooms and living rooms from the past that were ornamental rather than functional.
The real estate market will continue to shift until this virus is beaten, but it will leave radical changes to the market. Right now, sales are way up, inventory is way down and mortgage rates are ridiculously low. We do risk future foreclosures for some homeowners who can’t get on their feet after the virus is gone but there is little doubt the remaining real estate market will look different.
So, if you’re doing a lot of Zoom meetings, kick it up a notch and buy a home with a nice yard as your background, it may also turn out to be your best financial asset. Stay safe.
