Credit this month to past AARC Chair and current Board member Andre Nabors, whose regular informational emails to the group provided the basis for this intro…
We’ve all heard (and seen) the strength of the real estate market, particularly in the destination community industry. Many destination communities saw unprecedented demand increases in 2020 – a big example of that being the site of last month’s PGA Championship. Kiawah Island, jumping from $300-$350 million in 2018 and 2019 to over $800 million in 2020.
And while that demand is leveling off, it has not meaningfully dropped – many places have seen challenges in having enough inventory for buyers to choose from. This inventory shortage is being seen across all real estate – according to National Association of Realtors data, unsold inventory currently sits at a 2.4-month supply at the current sales pace, slightly up from March’s 2.1-month supply and down from the 4.0-month supply recorded in April 2020. Total housing inventory amounted to 1.16 million units, down 20.5% from one year ago. It’s a seller’s market: on average, homes sold in April had five offers.
The ramifications for retirement destination real estate? If there is a paradigm for home ownership, it is “buy a first home, trade up as your family grows, and sell it when you become an empty nester (and maybe buy something in a retirement destination).” The increase in demand of late is not those first-timers: the share of first-time buyers in April decreased to 31%, vs. 36% one year ago. The “trade up” buyers have pushed the average pricing higher, as empty nester (and the affluent “can work from anywhere”) folks have driven affluent buyers to destinations.
Andre is also co-Chair (with Ben Keal) of the 2021 AARC Annual Conference, in Myrtle Beach in November. These trends – and, importantly, how to benefit from them – are the central theme of that educational and networking event. We hope to see you there!
Chair, The AARC
Prospective Buyers Are Quickly Becoming Active Buyers
Rose Quint, National Association of Home Builders| May 7, 2021
Of the 16% of American adults considering a future home purchase in the first quarter of 2021, 63% have moved beyond planning and are actively trying to find one to buy, up from the comparable 49% share a year earlier. This increase marks the fifth consecutive year-over-year gain in the share of prospective buyers who have become active buyers. Several factors are driving this trend, including fear of missing out on still relatively low mortgage rates, desire for more space due to COVID-19, and desire to move out to outlying suburbs.
Millennials are the most likely generation to have moved on from just planning a home purchase to actively searching for a home to buy: 73% of this generation’s prospective buyers were already active buyers in Qtr1’21, up from 54% a year earlier. In contrast, the share rose only moderately among Gen Z and Gen X buyers, and not at all among Boomers.
Geographically, larger shares of prospective buyers in every region are actively trying to find a home to buy than a year ago, but the increase is most notorious in the Northeast (56% to 74%) and the West (51% to 69%).
As the share of prospective buyers actively searching for a home continues to increase, the length of time spent searching continues to grow. In the first quarter of 2021, 64% of buyers actively engaged in the purchase process have spent 3 months or longer looking, compared to 56% a year earlier. This marks the ninth consecutive year-over-year gain in the share of active buyers looking for 3+ months for a home to buy.
* The Housing Trends Report is a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets. The HTR is produced quarterly to track changes in buyers’ perceptions over time. All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult. Results are not seasonally adjusted due to the short-time horizon of the series, and therefore only year-over-year comparisons are statistically valid. A description of the poll’s methodology and sample characteristics can be found here. This is the fifth in a series of six posts highlighting results for the first quarter of 2021. See previous posts on plans to buy, new vs. existing preference, housing availability, and housing affordability.
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