A Different Kind of Spring Homebuying Season

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BLOG VIEW: Spring is typically peak season for homebuyers, but last spring was like no other. COVID-19 presented significant challenges for the home buying process – as it did for most aspects of our lives. In March and April of 2020, most expected the market to come to a screeching halt, but the housing industry proved to be more resilient than anticipated.

Even though there was – and still is – lots of work to be done, the pandemic and its challenges helped lay the foundation for enormous leaps ahead in technology and process improvement, setting buyers up for success well beyond the pandemic.

Last spring rates were trending down, which is great for homebuyers and homeowners ready to capitalize on favorable mortgage rates. This increase in mortgage lending demand came with a big new wrinkle. Lenders and others in the process had to deal with growing pipelines as most of their employees were moving to a work-from-home environment – pretty much overnight.

Homebuyers had essentially been preparing for this for years. Most house hunting began online well before the COVID-19 pandemic and buyers have been using the internet to find homes for years. The rest of the links in the chain had to catch up. Demand for mortgages, both purchase and refinance, surged to levels that surprised pretty much everyone. The stress on the system, and everyone involved, was tough.

While the hours may have been long, those in our industry realized how lucky we were to be thriving when so many around us were struggling due to the pandemic’s effect on jobs, health, and our normal way of living. The pandemic pushed everyone into a virtual environment, causing industry players to innovate if they wanted to survive and thrive in the coming year – and boy did they. Mortgage lenders closed a record number of mortgages in 2020 – even though many of the people doing the work were doing so from their basements, living rooms, or bedrooms – and sharing the internet with the rest of their family.

On the buyer side, one tailwind for a strong buying season in 2021 is personal savings rates. Certain studies have shown a lot of people saved their stimulus checks. Also, the simple act of saving on discretionary spending like entertainment, eating out, or shopping due to the pandemic helped homebuyers save money for the future.

On the headwinds side, most certainly lack of inventory is one of the biggest obstacles for homebuyers this spring, particularly at the first-time homebuyer price point because rising demand is also raising home prices. There is good news in that housing starts are increasing, though the increase is not likely to keep pace with demand. Millions of millennials reaching peak home buying age will likely keep demand high for years to come, should the economy remain strong.

A couple other things happened over the course of last year that may change the home buying environment this year and beyond.

First, many people have discovered new home priorities since last spring. Some like to cook at home and might prioritize a big kitchen over living close to restaurants. Others may prefer working out in a home gym and want extra space or a neighborhood with running trails. Some may prefer a climate that allows outdoor activity all year. Some developed new hobbies that may keep them home more often even if they go back to offices. And certainly, there are people who will be working from home permanently, meaning commutes no longer matter and extra space for a home office is of utmost importance. The bottom line is that a lot of people redefined what home looks like for them.

Second, there seems to be a heightened interest in improving the opportunity for first-time and/or low to moderate income homeowners. People across this country are actively working to help a more diverse group of people attain homeownership. We know it is the number one way to build wealth for one’s family and for the generations that follow. There is so much enthusiasm to break down some of the barriers that make it tough. Just a couple of the things brewing on this front are:

Outreach and education so that potential first-time homebuyers, and in particular, minority applicants, realize the resources, products, and assistance available.  We want these future homeowners to know that there are A LOT of down payment assistance programs out there and buying may even be cheaper than renting in their case;

The housing industry, communities, and government are innovating and actively working on ways to bring down the cost of new homes – whether it’s through new manufacturing processes, new building materials, zoning changes and more.  Some of this will take time – but it is most certainly underway.

Businesses and retailers are reopening with in-person capabilities and vaccines are rolling out.  This spring, buyers will be able to choose their experience – in-person, virtual, or hybrid. The pandemic inadvertently created much more flexibility for buyers. And the lenders they work with have these great new capabilities that, were it not for the pandemic, might have taken years for some to achieve.

The new landscape would not be possible without the tremendous amount of collaboration and innovation we’ve seen between all parties involved in home buying. Real Estate agents, lenders, appraisers, title companies, attorneys and more all worked together to keep serving buyers in uncertain times.

What’s most important is that people are excited about homeownership again and that is a wonderful thing.

Colleen Kennedy is vice president, strategic account manager, at Genworth Mortgage Insurance, where she is responsible for collaborating with strategic lender partners to successfully implement Genworth’s products and services that help borrowers buy and keep their homes. 

The statements in this article are solely the opinions of Colleen Kennedy and do not necessarily reflect the views of Genworth or its management.

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