The housing industry is uniquely positioned to take advantage of lifestyle changes accelerated by the pandemic. While we anticipated many of the trends in previous editions of The Light, we thought we would reach out to of our clients and colleagues across the country to see what their biggest “surprises” were in 2020:
- Rapid Innovation saved the housing industry. In the earliest weeks of the pandemic, developers and home builders rose to the challenge of finding new and innovative ways to sell homes. They pivoted to virtual tours, private appointments, and online home buying. We knew younger buyers would embrace these changes, but builders were surprised to see retirees use technology as well. One active adult builder noted conversion rates among prospects in the space tripled post-pandemic. And according to Redfin, in December 63% of home buyers made sight unseen offers on homes!
- The federal government stepped in quickly to help in an economic crisis. The stimulus packages that the US government put into place as a matter of helping consumers, homeowners, and businesses was unprecedented, and the speed it was enacted with was a surprise to many. According to the December issue of the Economist (12/10/20), “Roughly 20% of all dollars in existence were created in 2020.” If President Biden’s proposed stimulus package is enacted, the US government would have put $5 trillion into the US economy in less than one year. The stimulus gave consumers the confidence they needed to buy homes or, in some cases, assist with down payments.
- Nobody expected Home Depot and Lowe’s would become the hottest spots in town. 2020 was the year of DIY as Todd Tomalak, who heads our Building Products practice tells us that small project remodels grew 12%. Todd and his team now believe that we are witnessing the beginning of a long, broad increase in big project spending. Lumber and other building materials were in such short supply in 2020 that, at times, home improvement stores ran out of some inventory.
- Single-family rental (SFR) became an asset class, and operators are competing for land. COVID fueled the desire for extra space and yards, helping propel the SFR asset class as a viable investment alternative to apartments. And in an environment where real estate investors are chasing yield, SFR housing is poised for an even bigger boost. The surprise? Builders now have more competition for land in their markets. According to our land survey, build-for-rent accounted for 3% of all finished lot transactions nationally in the fourth quarter of 2020, including an amazing 8% in the Southeast!
- Resiliency. If there was one word we heard consistently from our friends and colleagues in the industry, it was resiliency. From sales teams taking ownership of connecting with prospects, to buyers coming out en masse to purchase a home. Developers reported stories of residents delivering food or supplies to first responders or mobilizing to help at-risk neighbors with shopping or chores. One of our clients, Rancho Mission Viejo in Orange County, partnered with its builders to provide enhanced home-buying opportunities for essential workers. Despite some early amenity closures, master plans proved they could provide well-designed, curated spaces that were often a protected enclave in an uncertain world. The top 50 master-planned communities in our ranking set a combined record for sales in the 10 years of our rankings, and the threshold to make the list jumped by 75 sales (437 sales for 2020 versus 362 in 2019).
And finally, it was no surprise to us that access to timely and accurate information to guide decision-making was more important than ever in a time of crisis. Our team worked together to provide our clients with great decision-making tools that helped them navigate their business for the long term.