Redfin's analysis reveals just how much homebuying has changed during the coronavirus pandemic.
Buyers Are Shelling Out Bigger Down Payments and Offering Above Asking In Order to Win
The median down payment on a home during the last six months was
"The surge in home prices actually hasn't resulted in higher monthly mortgage payments for most buyers because it has been offset by low mortgage rates, but it has driven up down-payment costs," said Redfin Chief Economist
In addition to spending more on down payments, homebuyers have been boosting their bids. During the last six months, 1 in 3 buyers (34.4%) paid more than the seller's original asking price, up from 1 in 5 buyers (21.2%) a year earlier.
"It's extremely competitive out there. One of my buyers recently beat out 25 other bids by offering
Buyers Are Waiving Contingencies At a Much Higher Rate Than Before the Pandemic
Over the last six months, 17.6% of successful offers submitted by Redfin agents waived the appraisal contingency, up from just 6.1% during the same period a year earlier. The share of successful offers waiving the inspection contingency jumped to 13.2% from 7.3%, and the portion waiving the financing contingency increased to 13.2% from 10.1%.
With more than half of home offers encountering bidding wars these days, buyers are finding that they need to sweeten their offers and get creative in order to win. Waiving these contingencies is a strategy buyers use to make their offers more competitive by assuring the seller that the deal will close without unforeseen headaches.
More Home Sales Are Being Financed With Conventional Loans
More than half (53%) of home sales in the last six months were paid for using conventional loans, or loans that are provided by private lenders and not backed by the federal government. That's up from 49.7% a year earlier. The portion of sales financed with jumbo loans, which are regularly used for purchases of higher-end homes, increased to 6% from 5.5%. Slightly more than a quarter (25.9%) of home purchases were paid for exclusively in cash, little changed from before the pandemic.
Meanwhile, the share of sales financed with
"Lenders have been tightening up requirements for borrowers during the pandemic because so many families are at risk of defaulting on their mortgage payments," Fairweather said. "This means that many lower-income Americans have been unable to qualify for the loans they need to become homeowners and start building home equity. But as lenders become more confident in the economic recovery, they will be more willing to offer loans to borrowers with less-than-immaculate credit."
The Homebuying Process Is Taking Longer
Homebuyers toured 14 homes on average during the last six months, up from 13 homes a year earlier. From start to finish, the homebuying process took a median of 96 days, compared with 91 days during the same period the prior year. It's taking longer to find homes in part because there's an intensifying housing shortage that's causing many house hunters to get outbid repeatedly.
"Within hours of a home hitting the market, the showing schedule is often completely booked up," said
To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/profile-of-a-pandemic-homebuyer/
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