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The 2020 ServiceLink State of Homebuying Report includes insight from over 1,000 homeowners to examine whether high home prices and low inventory had an impact on their decision to move. The survey asks whether these homeowners took advantage of historically low mortgage rates, and how the pandemic influenced their experience with technology.
The survey reveals that many homeowners thought of buying a house during the pandemic, but only a few proceeded with it. Only 11% purchased a home in the last 12 months. Of those who did buy, 36% did so to upsize from their current home, 32% bought as an investment, and 23% needed more space to work remotely. One-third (33%) thought about purchasing a home but ultimately decided against it. Of those who did not buy, 34% decided to upgrade instead, 31% said housing options were too expensive, and 24% indicated their financial situation changed. Another third (32%) are optimistic about purchasing a home in 2021.
Slightly more respondents (43%) reportedly financed their home through cash savings than with a traditional bank lender (42%). For those who bought a home in the past year, the gap jumps to 50% cash savings and 32% lender. In accruing these funds, 28% received money from family and friends, 14% were gifted or inherited funds, and 14% borrowed from those close to them. Additionally, 11% borrowed from 401K’s to finance their homes, which is what 17% of Gen Z/Millennials did.
The youngest generation of homebuyers led the surge in refinancing in 2020, but many are still waiting for rates to drop further. Nearly a third (30%) of respondents refinanced last year. Gen Z/Millennial respondents led the surge at 45%, compared to 35% of Gen X and 6% of baby boomers. For those who did not refinance last year, 40% are comfortable with current rates and 27% are waiting for rates to drop even further. Additionally, 50% stated they were unlikely to refinance in 2021.
“With interest rates at historic lows, I am encouraged by the number of younger respondents who have recently refinanced,” said Dave Steinmetz, president of origination services at ServiceLink. “However, for those unlikely to refinance this year, many could be leaving significant money on the table if they are waiting for rates to drop even further, as our study suggests. This demonstrates an opportunity for lenders to increase awareness and education around the benefits of refinancing in today’s market.”
The survey also shows that technology is accelerating much of the homebuying process. Of those who leverage technology through the homebuying process, 74% use it to research property listings online and 47% take a virtual tour of properties. Some respondents (18%) said they would move forward with buying a house without seeing it in person first.
“The COVID-19 pandemic and market conditions forced the real estate industry to reassess how it serves today’s homebuyer. With the evolution of technology to help streamline the process, it’s not surprising that our data found consumers are turning to tech-enabled providers who can meet their needs through any phase of the process,” Steinmetz added.
Read the full 2020 ServiceLink State of Homebuying Report here.