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3 Pandemic Housing Trends to Watch
As the COVID-19 pandemic enters its second year, the virus continues to impact housing trends in America. While white-hot housing demand and the increase in construction prices are making headlines, there are other interesting trends shaping the current U.S. housing market that are worth noting. This week, we examine three.
The Movers
Many Americans may still be sheltering at home, but that doesn’t mean they’re hunkering down in the same place they were at the start of the pandemic. A new survey from GoBankingRates found that 45 percent of Americans have moved since the beginning of the pandemic.
GoBanking Rates notes that among these pandemic movers, 8 percent moved to a different state, 15 percent moved in the same city, and 16 percent moved within the same state. Interestingly, 5 percent moved internationally. Those movers skew younger, with 24 percent of them in the 18-24 age bracket, compared with only 3 percent in the 55-64 age bracket.
Millennials, it turns out, are thriving in the work-from-home environment. With fewer ties, like families and career demands, they’re exploring new places to reside. Some of that activity may be influenced by reports of falling rents in some cities and incentives offered by some to entice relocators.
All of this relocation activity is also driving demand for rental housing among younger people who are pushed out of an increasingly expensive home buying market. This situation creates an opportunity for builders in the built-to-rent market, which appeals to younger people priced out of the market but wanting extra space often not available in multifamily housing.
The Remodelers
From March through August of 2020, about 60 percent of homeowners completed home improvement projects.[1] The four most common upgrades according to Discover Home Loans were:
- Kitchen and bath renovations
- Adding or improving home offices
- Replacing surfaces with easier-to-clean alternatives
- Installing air filtrations systems
The upside for homeowners is a more comfortable space that, in some cases, contributed to breaking an eight-year record in home equity gains.[2] Unfortunately, all that renovation activity pushed demand for subcontractors, which impacted home builders looking to keep pace with residential construction demand. With subcontractors remaining busy, many will be scrambling to hire enough workers to keep pace this year, says one Construction Dive report.
The tight labor market for subs will remain this year and may even accelerate. This means that some smaller companies may not survive, the report notes.
The Multigenerational Nesters
According to Real Trends, many factors, including the desire to care for aging parents and the economic pressures of buying and maintaining a home, have fueled interest in multigenerational housing. While single-family homes continue to dominate in the housing market, some 41 percent of American homebuyers consider additional space for parents or adult children when looking at homes.[3] Builders who offer models that appeal to multigenerational living may have the edge over those who don’t.
The Bottom Line
Most housing analysts predict that 2021 will be a good year for home construction, though perhaps not as good as last year. As the pandemic continues to drive housing trends, it’s worth paying attention to these changes and considering their impact on the residential construction market in the future.
[1] https://www.nerdwallet.com/blog/2020-home-improvement/#:~:text=Home%20improvements%20amid%20a%20global,to%20the%20August%20NerdWallet%20survey.
[2] http://www.mortgagenewsdaily.com/03122021_corelogic_equity_report.asp
[3] https://www.realtrends.com/blog/multigenerational-trends-in-the-housing-market/