How the coronavirus is changing homebuyer preferences

The coronavirus has upended many aspects of life in the United States and the housing market is no exception. To this end, TD Bank recently fielded a survey on how the experience of the pandemic is changing consumer views on mortgages and housing.

From an increased interest in outdoor space to a need for a dedicated home office, the pandemic created new drivers for refinancing, moving and other housing decisions, the survey found.

While some consumer sentiments toward housing remain unchanged, there are clearly new motivations at play now, which are more pronounced for some specific types of borrowers.

"There's talk about somewhat of a flight to the suburbs in the purchase market given the fact that people can work from home, for example. The survey supports that and I think there's some reality to it in areas around New York and Washington, D.C.," said Steve Kaminski, head of residential lending at TD Bank. "I think some of this is marginal, and for some, trends like city dwellers moving to the suburbs may not be long-term. Time will tell, but in the meantime, our loan officers are having a lot of conversations with borrowers about things like that."

TD Bank surveyed more than 1,000 borrowers in June about how quarantine measures changed their view of mortgages and housing.

The regional breakdown of respondents was as follows: 38% were located in the South, 24% lived out West, 21% were based in the Northeast and 17% were in the Midwest.

Millennials represented 39% of those surveyed, followed by Generation X (28%), baby boomers (27%) and the Silent Generation (6%). Gen Z also was represented in the survey but the number of respondents was very small.

The majority of respondents were employed homeowners, but more than one-third were unemployed or furloughed at the time the survey was conducted, and nearly one-third were renters. A smaller percentage of borrowers (10%) were living with family members rent-free at the time.

What follows are some highlights from their responses.

Many want to spend less, a handful are ready to spend more
Though one-third of those surveyed were unemployed or furloughed at the time of the survey, about 64% of all respondents were fine with their current home payment costs. About 29% of respondents wanted to reduce their spending on housing payments, with 38% of city dwellers in particular looking to cut that spending.

However, 7% were willing to dig deeper into their wallets for better homes.
People who weren't in the market for a new home before may be now
Most people don't feel radically different about their current home as a result of quarantine, but there are some subsets of borrowers that are more interested in finding a new place to live as a result.

While 58% said their feelings about where they live were unchanged, 11% had a heightened interest in moving.
Work from home arrangements allow some buyers to consider new markets
The majority of respondents said they were unlikely to relocate if their job converted to a remote position, but one out of five signaled that they would move further away if that happened.

More than 40% said they would remain in their current home if their job converted, and 36% had jobs that couldn’t be done remotely. But 20% would increase the physical distance between where they live and where they work.
Consumers have new motivations to renovate, refinance and purchase
Among those who want to move, motivations include getting a larger living space (24%), relocating to a neighborhood with fewer people (8%) and finding a smaller living space at (6%). Particularly high percentages of city dwellers, millennials and renters are interested in a larger living space at 39%, 34% and 32%, respectively.

Experience with quarantine has given consumers new reasons to renovate or relocate, with 19% of respondents who were looking to do either of those things saying that they'd like to make the change in order to have more outdoor space. About 15% wanted to improve their home office.

People that quarantined at a family home other than their own in particular are interested in increasing the outdoors space available to them (39%) and 28% of city dwellers are interested in this.

About 28% of borrowers started renovation projects during quarantine, with about 40% of rural residents making home improvements and 29% of city dwellers doing the same.
Investment in outdoor and indoor home improvement is growing
After quarantine began, homeowners became more interested in landscaping and gardening (31%) and creating a permanent home office (12%).

While rural residents naturally showed the most interest in landscaping and gardening at 49%, the percentage of city dwellers that did was relatively high as well, at 28%. Millennial interest in investing in permanent home offices was high at 23%.

Nearly one-third (29%) also embarked on a review of their personal finances, which likely has played a role in the strong demand for refinancing seen recently in the market.