With home prices rising at record pace in 2021, it only makes sense that 84% of homebuyers say finding a home within their initial budget is very or extremely important.
It’s a little less intuitive that air conditioning is valued as highly as staying on budget.
According to Zillow’s 2021 Consumer Housing Trends Report (CHTR), 84% of homebuyers say finding a home with air conditioning is very or extremely important. A/C ranked as a top priority for more homebuyers than number of bedrooms (78%), ample storage (75%), and good potential to increase value (71%).
The CHTR provides a snapshot of a record-setting 2021 housing market, which may give current homebuyers a better sense of what to expect going forward.
The rise of air conditioning
Based on the CHTR, air conditioning has been a highly sought-after home feature since the survey began in 2018. However, the share of homebuyers that prioritize climate controlled homes has increased significantly in that time, most notably in a 5 percentage point jump from 2020 to 2021.
The report doesn’t offer an explanation for the increased value in air conditioning. It’s likely due to a combination of factors.
Air conditioning is becoming necessary in more parts of the country as the frequency and intensity of wildfires, heat waves, and droughts increase. For example, unprecedented heat waves in the Pacific Northwest drove demand for air conditioning where it historically wasn’t seen as necessary.
Additionally, many now-remote employees no longer have an air-conditioned workplace to escape to eight hours a day, making in-home A/C all the more important.
Interstate migration driven by pandemic worries and soaring home prices may also be playing a role. According to the CHTR, 15% of homebuyers moved to a different state in 2021, up from 11% in 2019. And the metros with the highest inflow of homebuyers also have some of the warmest climates in the U.S.Rank Metros with highest net inflow in April 2021 Metros with warmest climates*1Phoenix, AZMiami, FL2Las Vegas, NVPhoenix, AZ3Sacramento, CATampa, FL4Austin, TXOrlando, FL5Atlanta, GAHouston, TX6Miami, FLNew Orleans, LA7Dallas, TXSan Antonio, TX8Tampa, FLAustin, TX9Cape Coral, FLLas Vegas, NV10Orlando, FLJacksonville, FL
Along with A/C, ample storage became more sought after in 2021. Seventy-five percent of respondents said it was very or extremely important to have in their home, up from 68% last year.
This is likely tied to the pandemic driving more people to use their homes as offices and classrooms.
Other homebuying trends
The report also found substantial shifts in who is buying homes and why. Most notably, first-time homebuyers made up just 37% of homebuyers in 2021, down from 43% in 2020 and 46% in 2018.
While first-time homebuyers market share, the LGBTQ+ community gained ground in the housing market. A record 12% of homebuyers in 2021 identify as LGBTQ+, up from 7% in 2019 when gender identity was added to the survey.
More first-time homebuyers (25%) described their timeline as “short” than repeat buyers (17%). Just 29% of first-time buyers described their timeline as “relaxed,” compared to 41% of repeat buyers.
This sense of urgency is likely due to increased competition in a hot market. The national median days on market fell to 15 days in June, leaving buyers with a shorter window to tour and offer on a home. Just 36% of buyers made only one offer, down from 52% in 2018. The median number of offers per buyer increased to two, after three years of being at one.
The pandemic also affected why people decided to move. The most common response was a change in family size (42%), followed by the ability to work remotely (30%), and change in employment (28%).
Sixty percent of respondents said low mortgage interest rates affect their decision to move.
For the housing market, 2021 was a year of change and extremes. In many ways, the market will stabilize as more inventory comes online. However, certain changes may prove to be long-lasting.
Understanding these changes may help today’s homebuyers navigate the new normal that’s coming.
Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway.