Article Takeaways
- Full cash offers for homes now comprise 36% of transactions nationwide
- Remote workers are moving to more distant suburbs for affordable homes
- More tiny homes are being transformed into office space
As the pandemic continues to disrupt the normal rhythms of American life, three new trends show how people are reacting and adapting to a hot real estate market. For those with the means, paying in full cash is an effective way to beat the competition. Others are taking advantage of their ability to work from anywhere and moving to distant suburbs for more spacious, affordable homes. And for those who believe the best solutions are found in one’s own backyard, tiny homes transformed into offices are becoming a popular option. Check out the stories below for all the details.
Buyers Paying in Full with Cash Offers
If you’ve got loads of cash on hand, you may be more likely to snag that dream home away from competing buyers relying on traditional financing. Payment in full is a growing trend evidenced by Realtor®.com reporting that 36 percent of home sales across the nation are cash deals. In the very active Northeast that marks a 3 percent rise over 2019. In the West, cash sales are up by 2 percent.
Much of this activity is driven by investors who scoop up 65 percent of the nation’s inventory going for $100,000 and less. At the high end of the market—$1 million and up—47 percent of cash transactions are made by wealthy buyers who intend to occupy the homes they purchase. In the middle tiers—$200 to $750,000—cash-buyers command 36 percent of the market.
For those who can’t afford the full cash route, competing for coveted homes has meant getting creative. Some buyers are borrowing cash from relatives and friends, and then taking out a mortgage to repay them. And innovative startups like Ribbon, Reali, and Accept, are helping buyers with fast-cash backing, bypassing the time-consuming loan-financing process. Of course, these ventures expose buyers to additional risk, so they should thoroughly research all options before choosing a purchase strategy.
All-cash sales are most common in wealthy coastal enclaves in New York and Florida, and affluent areas of cities like Atlanta and Tucson. Learn more about the rise of cash purchases by reading these articles:
Remote Workers Moving Farther from the Office
After the pandemic exiled millions from their offices last March, many began to feel cramped in their home spaces. A recent Redfin poll of 1,400 people in urban areas across the country revealed that 34 percent purchased more spacious homes because remote working was now a long-term or permanent option. Of those, 30 percent stayed within 50 miles of their old homes, with only four percent moving more than 50 miles away.
The poll’s findings suggest that the trend toward larger homes is just getting under way. If their ability to work from home becomes permanent, 33 percent of respondents would seriously consider moving within the next 12 months. Most would opt to stay within 50 miles of their current location.
Of course, money makes the difference between wanting to move and actually closing the deal. Among those who purchased new homes over the past year, 44 percent earned over $150,000 a year. By contrast, only 24 percent of those earning $50,00 to $74,000 were able to afford a new home.
If the work-from-home trend continues after the pandemic ends, analysts predict that more people will pour into the housing market. As competition and pricing heats up, many of them could push beyond the 50-mile radius in search of larger, more affordable homes.
Transforming Tiny Homes into Not-So-Tiny Offices
Although many space-challenged remote workers are solving their home-office crunch by buying larger homes, others are finding a solution in their own backyards—with a tiny home.
Classified as dwellings with 500 square feet or less of living space, tiny homes have become a popular option for many first-time homebuyers who can’t afford the $233,000 median price for a starter home*. By contrast, tiny homes usually range from $30,000 to $60,000. That makes them an attractive option for home workers who want a quiet, comfortable spot to do their jobs, but don’t want—or can’t afford—to leave their current homes.
Typically built to maximize natural light, tiny homes come with all the amenities remote workers need, from heating and AC to compact kitchens and a bathroom. They can also be outfitted with special work pods that maximize every precious square inch. Sure beats working on a plank in a musty basement.
If, at some point, a remote worker returns to an actual office building, the tiny office is easily converted into a guest house, grandparent dwelling, rental unit or simply sold and hauled away.
Check out some beautifully designed tiny offices in this article from Insider. And learn more about the tiny-home trend from Realtor® Magazine.
*Source: National Association of Realtors®.
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