How the digital mortgage revolution will influence influence homebuilders in 2021
By Michael Wise
The rapid acceleration of digital adoption is fueling an already hot market for home sales. Virtually overnight, our clients have shifted their way of working while becoming homeschool teachers, eldercare assistants and family Zoom moderators. They are savvier than ever before, and they expect a steady stream of technology improvements to continue to make their lives easier and their tasks faster. Builders can meet this challenge by using new digital tools to connect with both consumers and financial institutions.
Now people shop for everything from food to clothing to household essentials, completely online, and we’re seeing more clients search for homes and home financing there too. According to Bank of America’s 2020 Homebuyer Insights, prospective homebuyers are looking at real estate listings (49%), touring homes virtually (29%) and researching financial advice online (24%).
According to Bank of America’s 2020 Homebuyer Insights, prospective homebuyers are looking at real estate listings (49%), touring homes virtually (29%) and researching financial advice online (24%).”
As a bank, we foresaw a future heavily reliant on digital tools and have made major investments in our technology over time. We have built a full suite of digital solutions so clients can shop for homes, apply for a mortgage and buy cars. In fact, clients can now manage their entire financial lives all from their phones and computers. While especially helpful to the borrower, these tools are also critical to builders and developers. They provide simple access to financing data, including pre-qualifications, preapprovals and loan applications, and empower the client to be ready to buy or renovate.
Innovation isn’t new to the homebuilding industry, which embodies America’s brilliant engineering advancements and has, similarly, made striking strides to move online and improve operations. Today, clients can shop for new construction that suits any lifestyle, real or imagined, due to the tireless work of architects, designers and builders.
Over the past five years, more new-home inventory has moved online and allows builders to connect with real estate agents and customers directly. Builders know they can grow bigger, better and accomplish more by harnessing the power of technology.
The traditional ways of working are merging with a host of new industry advancements, shining a new light on the future of how we work. Using more advanced tools, builders are finding new opportunities and side-stepping more challenges, adding inventory faster and at greater scale.
At the end of last year, the US Census Bureau saw a spike in building permits resulting in a two-point rise month over month, and that rate of expansion is expected to continue, if not grow in 2021. At this rate, housing starts are no longer posing the problem they once did. Instead, moving homes off the market and into the hands of customers will be one of the biggest challenges in 2021. Meeting these challenges will require the same rapid rate of technological adoption to meet demand.
Digital mortgage solutions can help. Bank of America’s Digital Mortgage Experience® was launched in 2018 after years of development. It allows prospective homebuyers to shop and apply for mortgages without ever stepping foot inside a bank. And, once an application is complete, the borrower leverages our Home Loan Navigator to upload documents, complete loan tasks and view 24/7 loan status.
Most recently, our Real Estate Center was upgraded to connect home shoppers with for-sale properties that are eligible for our proprietary home buyer grants that can total up to $17,500 in down payment and closing cost assistance. The searchable properties are uploaded by member brokers, as well as home builders, and property listings provide contact information for the home builder or listing broker.
According to a Redfin report released in December, annual home sales are expected to rise more than 10% this year, up from a 5% rate of growth in 2020. The accelerated adoption of digital tools will only speed up that pace.
Builders who are prepared and eager to move can capitalize on the increased demand by working with real estate and banking partners with the digital capability to make the home search and finance process simple and transparent. The last several months have shown us that consumer appetite is there and is growing. Let’s get ready to work together to make it even easier for qualified buyers to find and purchase their dream homes.
Michael Wise, SVP, National Accounts Executive at Bank of America, has 29 years of experience in Real Estate, specializing in origination, marketing, and title.