Confidence Down? Consumer Searches for These Topics Surge
As we reported in CVAR Connect a couple weeks ago, Fannie Mae’s monthly Home Purchase Sentiment Index showed that respondents who thought it was a good time to buy a home decreased from 61% to 53%.
Despite that decline in confidence, the pandemic has both increased and altered demand for housing, and it has also helped push mortgage rates to record lows.
No surprise, Google searches for “Refinance home loan calculator” jumped nearly 4,000% last week, according to Google Trends. This as news hit of another record low on the 30-year fixed.
Searches for, “How low will mortgage rates go?” quadrupled.
There is also more evidence of a surge of interest among first-time homebuyers. Searches for “Process of buying a house” jumped 950%, and “Minimum credit score to buy a house” was also popular.
Can You Buy a House With Your 401(K)?
Some consumers, however, are stretching their finances to make that purchase. Searches for “Can you use your 401(k) to buy a house?” were up 2,800% in the past three months. Low supply and high demand has heated up the competition this summer, and competition was already fierce before the pandemic struck.
Just over half of the offers submitted to Redfin agents faced a bidding war in July, according to the national brokerage. Competition was highest for single-family homes, followed by townhouses and then condominiums.
“We may still be in the early innings of the pandemic migration wave,” noted Daryl Fairweather, chief economist at Redfin. “If coronavirus cases continue to climb, more employers will likely make flexible remote work policies standard procedure, which will drive further migration out of large, expensive cities. As a result, we may see bidding wars gain more traction in suburban areas and small towns.”
Another sign of the times: “How to buy foreclosure” has been a breakout search in the past two months, as well as the question: “Buy a fixer-upper or move-in ready?” Either owner-occupant buyers are looking for a good deal, or more investors are looking for an opportunity. Likely both.
Los Angeles Tops in This Search List
The growing trend of urban flight is also showing up in searches. Interest in the term “suburbs” hit an all-time high in July, not just in the U.S., but worldwide. Los Angeles is among the U.S. cities with the highest search interest in “suburbs” in the past three months, along with Chicago, Philadelphia, New York and Houston. While San Francisco didn’t make the top five, the outflow from the city has already caused a massive drop in rental occupancy and rent prices.
The trajectory of this housing recovery is still dependent on government relief to both the housing market specifically and the economy generally.
Some predict interest in housing will slow down after this initial surge, and while that trend has shown up in sentiment numbers, it has so far not shown up in home sales, prices, nor in consumer curiosity in just about every aspect of the market.