The Pandemic Impact: Buyers Want More Space, Less Density

16 September 2020

The Pandemic Impact: Buyers Want More Space, Less Density

Inman News

Redfin’s chief economist and AirDNA’s CEO discuss the trends they’re seeing in the housing market.

The real estate industry has been brimming with discussions about the “great reshuffling” or “suburban boom,” with some declaring cities dead and others arguing for their long term viability. But sorting through the noise, for what exactly and where exactly are buyers looking?

Darryl Fairweather, the chief economist at Redfin, provided some insight during a panel discussion alongside Scott Shatford, CEO of AirDNA, called, “Housing Market Trends: Where We Are and Where We’re Going.”

“Across the board, people are looking for more space, less density, bigger backyards,” Fairweather said. “A new trend is wanting a home office because remote work is the normal now.”

Redfin recently conducted a survey of homebuyers, asking, “What impact, if any, has the coronavirus pandemic had on your homebuying plans and preferences?” The study found that 21 percent wanted a designated space to work from home and 21 percent also wanted more outdoor or recreational space.

Data and graph credit: Redfin

“The pandemic has definitely changed the preferences that people have for their homes,” Fairweather said.

While not officially a survey respondent, Shatford echoed many of the same sentiments expressed by homeowners in the survey.

“I don’t know how much time you’ve spent in your home lately, but I have spent a lot,” Shatford said. “And with two little kids, there’s not enough space I could possibly afford right now. I think that’s driving the trend.”

With buyers looking for more space, much of the attention has been focused on suburban and urban areas. It’s actually difficult to get a sense of how many people left the cities, because many are just using short-term rentals as long-term housing, according to Fairweather.

Redfin’s data has shown that home prices — while increasing across the board in every type of market — are booming the most in rural areas, followed by the suburbs, with urban markets seeing the smallest amount of appreciation.

Shatford, whose data and analytics firm AirDNA examines the short-term rental market, said you can see what markets will be hot for future purchases, based on the popularity of the short-term rental market. That can provide some predictive power into where exactly these buyers fleeing cities are looking, whether its a second home or primary residence.

Markets like Nantucket, Massachusetts, and the mountains of Colorado have exploded with short-term rental demand, according to Shatford.

“Oftentimes, where people travel is often where they want to live,” Shatford said. “We see cool towns or cool destinations being hot as an Airbnb, before they’re hot as a place to live permanently.”

For agents and brokers, it’s not as simple as packing up your entire business and going to where the customers are, but Fairweather had some good news: There’s still a lot of variation in each market.

If you’re looking for a buy-side client in an urban area, for example, you might have better luck helping them find a deal on a condo, versus the stiff competition that buyer will face for a single-family home.

And conversely, if you’re looking for a sell-side client, if you can find someone selling a single-family home in a city, you’re likely to have a much easier time finding willing buyers.

Overall, the housing market has seen a v-shaped recovery from the March and April lows, according to Fairweather. It’s welcomed news for the industry and Fairweather believes we could see even more home sales in the coming months.

“We’ve seen a lot of people come off the sidelines in terms of wanting to buy a home, but sellers have been resistant to list their homes,” Fairweather said. “That has to do with the pandemic and not wanting to expose yourself to people coming in during open houses, or dealing with moving during a pandemic.”

“But once sellers see how much prices have gone up and how much of a seller’s market it is right now, they will come off the sidelines and we’ll see an increase in the total number of sales.”