No one ever expected the world to change so much as it has since the end of 2019. And this change will continue to remain, for some time more, unfortunately. But we humans like to be known as the smart species and we definitely are, given we do our research and remain open to opportunities. We were quick to see and recognize what best can be done to adapt to these testing times. We changed the way we lived our lives before and started focusing on what’s better and practical.
Along with the usual human lives, every business was affected. This also includes the real estate industry. With the change in lifestyle and work from home culture, house buying and renting requirements in the different tiers almost got to NIL. However, there rose the need for a new living culture to which people began to adapt quickly and positively – Single homes.
The demand for single homes did not go down. Though the construction pace slowed down, the demand for single homes didn’t. At the same time, homeowners were reluctant to list their homes for sale during a pandemic, which reduced the for-sale supply. Those who maintained the value of their property did enjoy the fortune to sell them at good prices as well. Some of the factors included generous mortgage forbearance programs and the foreclosure moratorium also reduced supply.
Studies suggest that the housing market tightened primarily because of a surge in demand for single-family living. Also called linear family living, other major factors that contributed to this surge include:
- With income crunch, people have started to prefer living in single-family accommodations to meet their needs and that of their spouse, children and parent(s).
- With the need to spend more time at home instead of the office and other public spaces, people are looking for comfortable and sufficient spaces inside their own homes.
- With the importance to maintain distance as much as possible to survive the pandemic, people are willing to build the trust to share spaces only with their immediate family members.
It is known that the market will take time to cool down because of the relaxation of the many pandemic-caused supply-side constraints. New demand has exceeded leaving behind pre-pandemic levels of supply, and the gap is too large can’t be realistically filled by new construction in the short term. Surprisingly, the jump in the listings might be because of many homebuyers who were owner-occupants selling their current home when purchasing a new one as well. However, the new subsequent listing of these purchases has not seen an increase in second-home buying. Another contributing factor could be a case where homeowners attempt to buy their next home before putting their current home on the market, as they can be confident of finding a buyer quickly.
Lower interest rates or borrowing costs have also influenced the housing demand. With interest rates on the lower side, people feel confident to take on more debt because they can afford relatively more debt for the same monthly outlay. In another way, they will be able to take the decision of purchasing a home because at low-interest rates wherein the amount they will need to pay won’t be burdensome.
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