It seems like nothing can dampen a homebuyer’s spirits. A new study of homebuyer sentiment by NerdWallet has found that despite a global pandemic, economic devastation, and rapid house price appreciation, homebuyers are as optimistic about buying and owning homes as they’ve been over the past four years. The study found that nearly 28 million Americans plan to purchase a home in the next 12 months and around 26 million hope to become first-time homebuyers within the next five years. In that group of 2021 prospective buyers, more than half said they feel better about their ability to purchase this year than last year.
“There are reasons for people to be hopeful right now,” said Elizabeth Renter (pictured), data analyst for NerdWallet. “Vaccines are rolling out and the survey found that many people believe the economy is going to get better this year. They also believe that their personal financial situation is going to improve.
“We asked the people that are planning to buy in the next 12 months, why they feel better about… this coming year. Fifty-nine per cent (59%) of those who feel better, say it’s because the economy is going to be stronger in 2021. Looking at their personal situation, 58% said their credit score is going to have improved in 2021, 50% say they’re going to have more income this year and 50% say they’re going to have more savings.”
Read more: PennyMac founder and chairman dies from COVID-19
NerdWallet doesn’t have the data to show whether or not this optimism is unusual in the midst of a recession. Renter acknowledged, however, that the optimism some homebuyers clearly feel contrasted against the overall gloomy economic picture points to the “tale of two Americas” that has been exacerbated over the past year. While millions remain unemployed and other service industry workers and small business owners are trying to recover, other salaried employees who were able to work from home have ended up in better financial straits than they were pre-pandemic. Without travel and dining options taking their disposable income, many have saved more and improved their credit scores.
Optimistic homebuyers, even those with more money saved and better credit, are walking into a snake pit of a market, though. Renter explained that many of the homebuyers NerdWallet surveyed already recognized that issue. Twenty-five per cent (25%) of homebuyers surveyed cited a lack of available homes in their area as a factor preventing them from homeownership.
In the context of that market, mortgage professionals will have to toe a delicate line between keeping their clients optimistic, while setting realistic expectations. In Renter’s view, flexibility will be key. Thanks to the more widespread use of telecommuting and the wider geographic net many homebuyers can cast, clients could become more flexible when it comes to exact location of their home. More broadly, however, Renter believes that mortgage professionals need to prepare their clients to be flexible with as many of their criteria as possible. With homes going on multiple offers across the country, getting hung up over something like hardwood floors or pot lights could be the difference between homeownership and renting.
Read more: loanDepot becomes official mortgage provider of MLB
While Renter acknowledges not all of those 28 million potential homebuyers are going to purchase in 2021, she believes their optimism represents a real opportunity for mortgage professionals, provided they manage expectations correctly.
“We see this optimism every year when we ask if people plan on buying and so we know every year that not all of them are going to be able to follow through for any number of reasons,” Renter said. “So I think [mortgage pros] need to be real in their marketing efforts, be real with their clients, and help them navigate this tough process. The ones that are successful this year are going to be the ones that can weather the competition, that can stomach the fierce competition. So, I think a dose of realism will be extremely helpful.”