3 Problems Homebuyers Never Had to Worry About — Until Now

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Location has always been a huge factor in buying a home. Can the kids walk to school? And is the school any good? Is there public transportation nearby? How far is it to the grocery store? Should I buy a house now? Can I get to work quickly?

That last question may be moot for people who want to and can continue to work from home as the pandemic eases. Their commute is just steps from the kitchen, or maybe their desk is in the kitchen, and they can live anywhere in the country they’d like. That busts the traditional notion of location wide open. 

Besides location, size/style, home prices, down payment, interest rates and monthly payments, there are other factors to consider now. Remote work initiated by the pandemic is one, but the worldwide health crisis has also reversed the trend of smaller places. Home office space is now on many buyers’ wish lists. Zillow reported in December 2020 that 48% more of its listings were touting a “home office” or “Zoom room.”

The 3 New Factors

Home buyers are now asking themselves these questions: 

  • Is there room in the house for an office, maybe two? Work from home situations spurred by the pandemic are likely to continue for many American workers, at least in a hybrid format. 
  • How might climate change affect the area where the house is located? This pertains mostly to homes near water or where wildfires have created much devastation in recent years. 
  • Do I really need to buy a house now? This might be an age-old question but it has priority now. It’s a seller’s market thanks to short supply. In many areas home prices are rising fast thanks in part to remote workers leaving big cities and taking their big salaries with them. They are buying homes in places like Austin, Texas;  St. Petersburg, Florida, and Madison, Wisconsin, among others, and driving up prices. It may be smart to wait out this societal shift.

Despite the addition of these factors, home ownership remains a stable investment because the money you spend on rent goes instead to decrease your mortgage and increase your true ownership in the property you have chosen. Mortgage rates are low — for now — but so is inventory, and in most areas that means prices are high.

There are four financial questions you should answer before buying a house. But there are other considerations too. Consider which of the following topics apply to you and how they impact your decision to purchase a home.

Location, Location, Location

In most cases, buying a home requires gainful employment, and you (and perhaps your spouse or partner) have that. Prior to the pandemic, another major consideration for homebuyers was the location of the new home relative to their place of work or even the attributes of the neighborhood.

But, during the pandemic, many people worked from home (if they were lucky enough to maintain employment). Twenty years ago, a good location for a home was close to work.

A decade ago, working remotely was seen as a positive perks resulting from digital communication (with stories of adventurous types, especially tech professionals, taking their jobs with them to tropical locales), but, in 2020, working remotely became a necessity.

The meaning of location, location, location has changed.

In May 2021, some companies welcomed back employees into safeguarded in-office environments, while some offered employees a hybrid of in-office and at-home situations. Still others, realizing they could exist and benefit from an all-remote work staff, are closing their physical offices, or reducing their office space significantly.

So, in terms of your own work situation, you may not need to be near your office anymore. If you are only going to go into the office twice a week, how close do you need to be?

And how solid is your current employment status? If making a home-buying decision based on location related to your employment situation, are you going to be staying in that position and with that company for a long time to come? Does that play into your decision to buy a home?

How Much Space Do You Need?

Before the pandemic, your living space seemed adequate. But, when it became necessary to create a viable work space in your home, the house suddenly became tiny. If you lived with someone else working from home, two work spaces were needed. Your home became the place where you ate, slept and binge watched plus your office, and in some cases, a classroom for children.

For years, there has been a move toward smaller, more efficient and environmentally friendly homes. They may not all have been tiny houses but they were smaller. In 2021, the National Association of Home Builders reported more interest in larger homes — people want space.

So is your home going to be your office going forward? Will there be occasions where multiple people need to work at home at the same time, and is one of you willing to use the kitchen or the basement or the garage as a makeshift office?

If you are going to need more space in your new home in order to make remote employment situations work, you will need to balance your need for space with your budget for a mortgage. (Lucky for buyers that interest rates are low. It is unlucky for buyers that inventory is also low and sellers are reveling in higher prices.) That could require moving farther away from an urban setting to find a suburban location where the size of the home matches the size of your budget.

But, then, that consideration runs headlong into another consideration …

What About Climate Change?

For decades, being close to water, especially the coast, was desirable if not always attainable moneywise. But climate change and rising water temperatures has made coastal living too risky for some as serious storms and flooding in those areas become more common. Areas prone to wildfires are also being considered more carefully.

These are extreme situations but a recent survey published on Stanford.edu said that 68% of millennials, the oldest of whom are turning 40 this year, are interested in buying and living in areas less known for natural disasters.

Transportation is another issue. The farther you move from an urban setting, the more you are likely to need to use your car. Many young adults today are embracing the climate-friendly urban lifestyle in which they use public transportation to get around rather than own a vehicle.

But that may not be an option if the other considerations (space, budget) force you to move to the ‘burbs.

If you are going to be working remotely and don’t need to use a car to get to your office, an urban location might still be in the cards, depending on how much space you need.

Timing is everything

With all of the above thoughts running through your mind, you have still another matter to consider, and that is timing. When do you need to make a decision on buying a home?

Although demand today far outweighs supply, giving sellers a financial edge over buyers, mortgage rates remain very low. If you are going to need a mortgage to purchase your home, now is the time to acquire one, if you are going to qualify. Shopping for mortgage rates online may be the wise choice.

The Federal Reserve board has indicated that there will be no federal interest rate increase until at least 2022, but the American economy is expected to continue to grow in the post-pandemic climate. Such growth could lead to interest rate increases next year to protect against inflation. One thing seems certain: if you need to buy a home, and cost is a concern, now is the time to do so.

Decisions, Decisions

Don’t you hate it when your parents’ advice turns out to be correct?

You need a pros and cons list. You actually need more than one pros and cons list (location, space, cost, transportation). And you need a list of priorities.

  • Do I need to buy a home now?
  • Do I need to live in a particular location?
  • Am I going to be working from home, in an office or a hybrid situation?
  • How much space do I/we need?
  • Which of the above factors takes precedence?

The decision to purchase a home is one of the biggest of your lifetime. Due to the pandemic, climate concerns and remote working possibilities, it has become more complicated than ever.

Kent McDill is a veteran journalist who has specialized in personal finance topics since 2013. He is a contributor to The Penny Hoarder.