With conditions for the upcoming spring home buying season very similar to last year's – even a dramatic departure from the past – a new normal could be created: a year-round selling season.
Home sales activity in 2020 was far different from previous years as the pandemic forced changes to traditional patterns and practices. Following the outbreak of the pandemic and subsequent lockdowns in March, April and May, buyers – many motivated by record-low mortgage rates and the ability to work from home – began buying homes throughout the summer and beyond.
"The real estate market is unusually hot – it is acting like it is springtime, with a lot of demand from home buyers," Redfin chief economist Daryl Fairweather said in a January 15 press release. "Typically, the vast majority of homes for sale in December are homes that are in the market because they are overpriced or have a property problem. This December, as so many Americans move, dozens of more desirable ones arrive Homes to market – but not enough to meet insatiable demand from home buyers. "
This was confirmed in data from ShowingTime, a planning platform recently acquired by Zillow, which tracks the average number of appointments received on active property listings.
In December, in-person home visits rose 63.5% year over year, the company reported.
According to a MyWalletJoy survey of 2,723 adults conducted between December 9-11, 2020, about 17% of Americans who haven't bought a home since March 2020 plan to do so before the end of 2022. Additionally, 24% of Americans don't plan on doing so in the same amount of time they wish they could.
Given the continued spread of COVID-19 and predictions that vaccinations won't reach the general population until summer, 2021 is likely to reflect 2020 in both its activity and process. Instead of a concentrated spring season, the market will be bustling all year round.
The market rings
Certain indicators can provide clues as to which direction this year's spring sales season will be. The success of vaccine rollouts across the country is a place to look.
Last year, "the normal seasonal pattern clearly did not occur. Whether or not it occurs in 2021 depends on the vaccine problem," said Doug Duncan, chief economist at Fannie Mae.
However, problems with vaccine distribution in a number of areas make it unlikely that sellers will reach a higher level of comfort earlier than April at best. "And whether people will rush out the door to buy a house right away remains to be seen," said Duncan.
The number of in-person visits to listed properties in January should provide an accurate forecast of spring sales activity, said Michael Lane, president of ShowingTime. He is curious how the January figures will behave compared to the same month last year.
"About the same thing will tell me we might be preparing for a typical year [but it is], but my gut tells me we're not done making up for lost time," Lane said. "There are a lot of people who didn't sell their house because they felt uncomfortable in 2020."
On the other hand, 2021 could be another year where the sales pattern is "strange" compared to the past, he said. "It's not going to be like the March and April closings last year, it's going to be a slow increase, but I bet June to December will be higher than it was two years ago."
The pandemic-induced changes over the past year should see sales boom in both the spring and beyond, said Andy Sachs, real estate agent at Keller Williams in Newtown, Conn.
"It really depends on how America will go to work," he said, adding that widespread flexibility in working from home and cost-saving efforts to reduce office supplies are long-term trends that will affect the market .
"And if that's the case, you'll keep pushing shoppers out of the city, from the major metropolitan areas to the suburbs," and even beyond, where they can potentially get more value for their money, Sachs said.
Additionally, the traditional sales curves have flattened somewhat over the past decade, eliminating the peaks and valleys of seasonality.
"Society is a bit ephemeral in general," Sachs said. Parents may prefer their children to move into a new school district in the fall, "but ultimately I don't think that's a driving force. So what we're seeing this season is a very, very robust summer in the fall, in the winter sales season, when people are comfortable and let people into the house to look. "
Companies like the fulfillment service provider Promontory MortgagePath expect increased activity. It is preparing for increased demand from lenders for its services by being slightly overstaffed. "So we have a bit of a bank, a bit of a buffer," said Chief Operating Officer Debora Aydelotte.
"We hope for typical but I don't think that's going to happen," said Aydelotte. "What we were expecting is a very bumpy re-entry in 2021, [but] the spring sales market will arrive early in some places due to the pent-up demand."
As each listing becomes increasingly competitive to buyers, lenders may feel some pressure. Getting credit quickly through the underwriting process could be the differentiator for the consumer's business.
Home buyers are doing everything possible to make their offer the "best," said Tony Weick, president of Bell Bank Mortgage.
"The best" not only in terms of price, but also "the strength of the approval, the lender the customer uses and the speed with which a buyer can close in certain situations," said Weick.
"Each scenario will have different triggers, but lenders need to be able to take into account all aspects that customers and markets are asking for during these times," he added.
Lenders who had to change their practices during the pandemic will need more changes to prepare for this buying season.
"We had to think differently and learn from what worked well, what more we needed to do and where we might need to adjust further," said Cameron Beane, director of pricing and secondary markets at TD Bank, which covers the East Coast markets of Maine Florida. "We need to keep adjusting to an economy that is so early on in what ultimately has to happen so that we can say we are out of the pandemic and are back to whatever normal may be.
"Certainly nobody at TD knows what that is. We all learn through the lens to support our customers."