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Coronavirus and Real Estate: Market Changes in 2020

Study: Homeowners gained $3.1T in equity last year, prices rose at a rate not seen since 2013, inventory dropped by 24% and 58% of buyers faced a bidding war.

SEATTLE – The real estate market is in a constant state of flux, and buyers’ demands change over time. In 2020, however, the pandemic and resulting lockdowns changed sellers, buyers and homeowners. A study by Redfin provides a snapshot of how those changes impacted the market.

$3.1 trillion: The amount of home value Americans gained. Despite the economy’s plunge into recession, U.S. homeowners have reaped $3.1 trillion in home value during the pandemic as a result of rising housing prices. The total worth of U.S. homes was $32.4 trillion in January, up 10% from $29.3 trillion a year earlier.

2013: The last time U.S. home prices surged this much. The median home sale price in the U.S. was $330,500 in January 2021, up 14.3% from a year earlier. That’s the biggest annual gain during a given month since at least 2013.

24%: The record decline in inventory that’s driving a massive housing shortage. There are significantly more buyers than sellers – an imbalance that has existed for years but exacerbated during the pandemic. The supply of homes for sale plummeted a record 23.6% year-over-year in January as scores of Americans relocated, drawn in by low mortgage rates and the new-found ability to work remotely. Beyond any increase in buyer frustration, that inventory shortage acted as a catalyst for many other housing-market shifts, including skyrocketing prices and bidding wars.

“It’s a very, very challenging market for buyers, so I’m telling my clients that they should always have second- and third-choice homes in mind – and may want to consider making offers sight-unseen,” says Redfin Cleveland real estate agent Danielle Parent.

58%: The share of home offers facing bidding wars. For buyers, the current U.S. real estate market is one of the most competitive in history. Nationwide, Redfin says that 58.3% of its January 2021 home offers entered into bidding wars, up from 53.3% in December – the ninth-straight month with bidding wars in more than 50% of transactions.

Another sign of intense competition: Homes tended to sell quickly and for more money than expected. The typical home sold in January went under contract in 34 days – 22 days fewer than a year earlier. And 32.9% of homes sold above their listing prices compared with 18.9% a year earlier.

45%: The jump in luxury-home sales that outpaced the increase in affordable-home sales. Sales of luxury homes surged 45% year-over-year during the three months ending Jan. 31 – more than any other price tier – as affluent Americans bought vacation homes and more worked remotely. Home sales in the affordable price tier grew just 9%.

84%: The growth in demand for second homes. Similarly, demand for second homes jumped 84% year-over-year in January, outpacing the 36% increase in demand for primary homes, according to Redfin’s analysis of mortgage-rate lock data provided by Optimal Blue.

2.7 million: The number of U.S. homeowners in forbearance. About 5% of U.S. homeowners, (2.7 million) were in mortgage forbearance as of Feb. 16, down from a peak of 4.8 million (9%) in May, according to data provider Black Knight. Forbearance allows them to avoid monthly mortgage payments and make up the loss as a lump sum, when the home is sold, or tacked onto the end of their normal mortgage period. The U.S. government enacted the CARES Act in March, allowing Americans to enroll in forbearance programs if they’re struggling to pay the bills during the economic crisis brought on by the coronavirus pandemic.

63%: The record-high portion of homebuyers making offers sight-unseen. Almost two-thirds (63%) of people who bought a home in 2020 made an offer on a property that they hadn’t seen in person, up from 32% in 2019. It’s the highest share since at least 2015. Some homebuyers may make sight-unseen offers because it’s a safer option during the pandemic; others do so because it allows them to submit quicker and more competitive bids.

1 in 4: Share of listings that mention home offices. With Americans spending so much time at home, listings with home offices and nice views have grown in popularity. A quarter (24.9%) of listings mentioned home offices in January, up from 22.9% a year earlier (+8.7% year over year), according to a Redfin analysis of multiple listing service (MLS) data. Other January highlights include:

  • 16.7% of homes listings mentioned views (+8.4% year over year)
  • 17.2% of home listings mentioned spas (+6.8% year over year)
  • 13.0% of home listings mentioned pools (+2.4% year over year)
  • 5.7% of home listings mentioned lakes (+9.6% year over year)

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