How will the post-pandemic period look from a real-estate perspective?
Zillow brought together some experts and queried them on what’s likely to change, and what’s expected to remain, when the pandemic moves on and life returns as (somewhat) normal.
- Housing location and size preferences may – or may not – return to pre-pandemic norms. Experts surveyed by Zillow were split on whether housing preference shifts during the pandemic will last.
When asked about Americans’ preference for living in the suburbs over urban areas, the same share of Zillow Home Price Expectations (ZHPE) panelists said the shift was permanent as said the shift was temporary (46 percent each), while 8 percent said there has been no shift at all.
The results were similar when asked whether consumer preference has changed in favor of proximity to smaller cities over larger cities, or larger homes in favor of smaller homes. Zillow’s Ideal Home Survey results show no change in the size of Americans’ ideal home since last year. According to the survey, Americans prefer a 2,000-square-foot home with three bedrooms and two bathrooms – the same as when surveyed a year ago.
- Ongoing telework options will have an impact on sales. With teleworking expected to continue to some degree when the pandemic ends, increased home-buying demand thanks to the added flexibility offered by remote work is likely to persist – Zillow economists expect 17.2 percent more home sales this year than in 2020.
- More homes will come onto the market to help meet demand. A majority of ZHPE panelists (53 percent) expect inventory will begin to grow again this year, likely during the second half of 2021.
“As the economy continues to recover, more potential sellers will enter the market as they gain confidence in their employment,” said Samer Kuraishi, president and founder at The ONE Street Co. in the District of Columbia.
“Increased employment stability will only raise confidence and push people off the sidelines.”
- Home prices will continue their climb. Even with an expectation for more inventory to help meet buyer demand, ZHPE panelists on average expect home prices to grow 6.2 percent in 2021 – a full two percentage points higher than when they were surveyed in Q4 2020 – and several panelists predict double-digit price growth this year.
“The panel’s five-year average annual home price forecast has never been more optimistic,” said Terry Loebs, founder of Pulsenomics. “This is great news for existing homeowners, but even with a robust economic rebound in the coming months, affordability will likely remain a challenge.”
- Buyers gravitate toward waterfront living. Zillow’s Ideal Home Survey found a notable increase in people who say their dream location is near the water. More people say their ideal home would be on or near a beach (21 percent, up from 17 percent in 2020) or a lake (16 percent, up from 12 percent).
Only 25 percent said a pool is extremely or very important in their ideal home – perhaps because they’re dreaming of swims in the ocean or lake, instead.
- A large kitchen is the home feature the most people say they couldn’t live without. According to Zillow’s Ideal Home Survey, 70 percent of those surveyed said a large kitchen is extremely or very important, edging out a large en-suite bathroom (68 percent), walk-in closet (63 percent) and a patio or deck (62 percent) as the must-have feature in their ideal home.
It’s even more indispensable for those who say they’re more likely to move because of the pandemic, as 78 percent of them say a large kitchen is extremely or very important.
Buyers often are willing to pay a premium for the kitchen of their dreams. Among the 10 features most often mentioned in listings that sold for more than expected during the pandemic in 2020, six are kitchen-related. Steam ovens were the most-coveted feature of the year, associated with a 4.9-percent sale premium.