American Home Buying Spree

According to a Pew Research Center survey published in February, people who moved between February and November 2020 for reasons other than the coronavirus outbreak. 

Only about four-in-ten (43%) of those who moved due to the coronavirus outbreak said it had a positive impact, compared with about six-in-ten adults (61%) who said they moved since last February for reasons unrelated to the pandemic. The share of pandemic-induced movers who said that relocation had a negative impact (29%) was higher than the share of other movers (12%) who said so.

According to PEW Research in March, Americans are on a near-record homebuying spree amid a pandemic and a recession.

In the fourth quarter of 2020 there were an estimated 82.8 million owner-occupied households in the United States, according to recently released Census Bureau data. The number of homeowners increased by an estimated 2.1 million over the prior year. Based on fourth-quarter nonseasonally adjusted data, this matches the largest prior net increase in homeowners that occurred during the housing boom between 2003 and 2004 (2.1 million).

Here in the Twin Cities, the evidence is in our inventory numbers.

 

The boom in homeownership has occurred during a time that has brought financial challenges for many Americans. There were steep job losses in 2020 due to the pandemic, but they fell most heavily on young adults and workers in low-wage occupations. Both of these groups are less likely to be prospective home buyers. The New York Federal Reserve found the median credit score of first-time mortgage borrowers in 2020 was about 740. A credit score of 700 or above is generally considered good, and the median for 2020 was “more prime” than ever dating back to 2002.

At the same time, interest rates were at record lows in 2020, making it easier for those who were in the market for a home to take that step.

In addition, household incomes were at a record high before the onset of the pandemic. The median adjusted household income was about $80,700 in 2019, up from $76,000 in 2018. And household incomes were at records for most age groups.

Finally, the net increase in homeowners reflects a slowdown in foreclosures. Prior to the pandemic, the foreclosure rate was far below its 2010 peak. While the recession has made it more difficult for some homeowners to stay current on their mortgage payments, the foreclosure moratoriums have thus far prevented many homeowners from losing their homes.

*2021 Home buyer tips

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