Price growth began accelerating for affordable homes and decelerating for expensive homes shortly after the
"Spending so much time at home during quarantine has made a lot of people realize that it might be time to stop renting a cramped apartment in the city and time to start owning their first single-family home," said
Affordable-Home Supply Continues to Shrink
The jump in prices of affordable homes is tied to a shortage in the number of affordable homes on the market—an issue that has plagued house hunters since 2012 and is showing no signs of letting up.
The gap between the supply of affordable and expensive homes widened further as the coronavirus pandemic worsened. Nationwide, there was a weekly average of about 322,000 homes for sale in the bottom price tier during the 12 weeks ending
During any economic downturn, buyers tend to flock to more affordable homes, reducing inventory and driving up prices in that segment of the market. Today, this trend is being intensified by low mortgage rates, which are attracting a rising share of first-time homebuyers,
"The severe shortage of affordable homes that we've been grappling with for years is now being exacerbated by an increase in the number of buyers
Marr continued: "Prices will likely continue to grow faster in the more affordable segment of the market for at least the next few years given this lack of supply. Fortunately, mortgage payments are actually lower now than they were a year ago, despite the growth in home prices, because mortgage rates have dropped so much; the median monthly payment on a home listed in May fell to
Demand Ebbs for
In nearly every metro Redfin analyzed, the top price tier grew at a slower rate than the bottom price tier during the 12 weeks ending
The relatively slow price growth at the high end of the market may also be tied to the fact that people are now purchasing less expensive high-end homes, according to Marr. For example, a high-end buyer may now be in the market for an
Another factor contributing to the slowdown at the high end of the market is the ongoing credit crunch. Many buyers have found it difficult to secure jumbo loans, which are regularly used for purchases of pricey homes, as banks have backed away from this type of credit during the pandemic.
To view the full report, including charts and methodology details, please visit: https://www.redfin.com/blog/most-affordable-homes-us-getting-more-expensive/
These findings are from an analysis that divided all U.S. residential properties into 5 tiers based on Redfin Estimates of the homes' market values as of early June. This report focuses on the "bottom" or "affordable" tier, i.e. homes estimated to be in the 6th-35th percentile for value, and on the "top" or "expensive" tier, which represents homes estimated to be in the 66th-95th percentile for value. For the purposes of this report, Redfin did not look at the very top and bottom 5% of the market. Redfin will report separately on the top 5% of the market, which will be considered the "luxury" market.
Redfin (www.redfin.com) is a technology-powered residential real estate company, including brokerage, iBuying, mortgage, and title services. Founded by software engineers, we run the country's #1 most-visited brokerage website and offer a host of online tools to consumers, including the Redfin Estimate. We represent people buying and selling homes in over 90 markets in
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the
View original content to download multimedia:http://www.prnewswire.com/news-releases/prices-of-affordable-homes-jumped-5-5-during-the-pandemic-301084174.html
Redfin Journalist Services: Isabelle Novak, (414) 861-5861, firstname.lastname@example.org