Covid-19: Spending a lot of time at home?

MBA chief economist Michael Fratantoni said that a COVID-19 related baby boom or a pandemic-related increase in divorces could potentially spur some demand in housing and household formation. Fratantoni speaking at the virtual industry pow-wow, Mortgage2020, said that the dueling hypothesis that people have at the moment is that nine months from now we are going to have a bit of a baby boom. The other is three months from now the divorce rate is going to kick up. “One or both of these things could happen and that is an immediate increase in housing demand and household formation, ” he said. Fratantoni said that another driver for housing could be the desire for home office space. Looking forward, the crisis could weaken the demand for office space as businesses embrace the remote work environment. On the flip side of that is that you are spending a lot of time at home. “Many people are recognizing they are using the home to a greater extent than they ever did before so maybe their demand is going to shift up,” he said. “In the long run, a little less office demand and a little more office demand might be the result of this.” Source: National Mortgage Professional

Is it possible that home buyers are adjusting more quickly to this brave new virus-driven world than was hoped? Will Americans now do the whole home purchase shtick from their living room couch? A recent survey the National Association of Realtors® (NAR) conducted among its members found that one-quarter of them had facilitated a purchase contract where their customers had not physically seen the property. Those buyers had visited a median of only three homes, either virtually or in person, before signing a contract. NAR's 2019 Profile of Home Buyers and Sellers found buyers typically looked at nine homes before buying. NAR chief economist Lawrence Yun said, "Expect second quarter home sales activity to slow down with the broad observance of stay-at-home orders, but sales will pick up when the economy reopens as many potential home buyers and sellers indicate they're still in the market or will be in a couple of months. Home prices remain stable as deals continue to happen with the growing use of new technology tools. Remarkably, 10 percent of Realtors report the same level of or even more business activity now than before the economic lockdown." Source: NAR

Thanks to an entire industry of support services such as home sharing apps like Airbnb, communication tools like Slack, and co-working spaces like WeWork, living a remote lifestyle has become fairly accessible. One study found that 27% of U.S. workers said they “might become digital nomads,” and whether or not they would all make that shift, it shows a significant level of interest. In a time of crisis, on the other hand, people want the opposite of the uncertainty of a nomadic lifestyle. The first principle of the Trauma-Informed Care model, which is commonly applied as a therapeutic model in crisis settings, is safety. Following a major crisis, people need to feel safe and secure, and they want to have a sense of control in their lives. Many homebuyers today and in the months following may be influenced by the stability of homeownership and the comfort of owning a safe space in the chaos. The pandemic, while causing many other economic problems, may increase the desire for homeownership among Millennials, as they search for stability. How we live will forever be transformed by the pandemic, and the housing industry plays a critical role in response. We will likely see an increase in desire for stability through homeownership, possibly a desire for more space and upgrades as people continue to find a safe haven in their homes, and we must continue to find ways to meet our communities’ needs for social connection. Source: HousingWire