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March 12, 2020 at 8:00 AM EDT
Redfin: Homebuyers Have Significantly More Purchasing Power in 2020, But Must Contend with Low Inventory and Coronavirus Concerns
A buyer who could afford a $457,000 home in March 2019 could afford a $508,000 home today
In Dallas and Portland, Oregon the share of homes affordable for a $2,500 monthly payment increased, while Phoenix and Las Vegas have fewer affordable homes even with lower rates

SEATTLE, March 12, 2020 /PRNewswire/ -- (NASDAQ: RDFN) —  A dramatic drop in mortgage interest rates, driven by coronavirus fears, has given homebuyers a big boost in purchasing power in recent weeks, according to an analysis from Redfin, (www.redfin.com), the technology-powered real estate brokerage.

At a mortgage interest rate of 3.2%, a homebuyer with a $2,500 monthly mortgage budget could afford a home that is $51,250 more than in March of 2019 when rates were 4.4%. Put another way, a buyer who could accord a $457,000 home in March of last year could afford a $508,000 home today.

"Potential homebuyers now have an extra incentive to buy a home despite all of the economic uncertainty from the coronavirus," said Redfin chief economist Daryl Fairweather. "And, many current homeowners now have the option to refinance their mortgages and gain some extra spending cash each month. Low interest rates won't help with direct impacts of the coronavirus on the economy like declines in tourism and service sector spending, but they will mitigate impacts to housing."

The boost in purchasing power comes at a welcome time for homebuyers who have been facing major inventory crunches and intense bidding wars in many markets. In January, the housing supply fell 11% year over year, and there were fewer homes for sale than any time since January 2013.

Despite there being fewer homes for sale in most markets, the share of homes for sale that were affordable on a $2,500 monthly payment nationally increased 1.9 percentage points from 68.6% between March 4 and March 10, 2019 to 70.5% between March 2 and 8, 2020.

The markets where homebuyers are experiencing the biggest boost in the share of affordable inventory compared to a year ago were Dallas (+6.2 points), Portland, OR (+5.2 points), and Richmond, VA (+4.3 points).

"I just had a buyer who was at the top of his budget lock in a 2.99% mortgage rate and he is ecstatic at how much more flexibility his finances will have thanks to the interest rate drop," said Portland Redfin agent Meme Loggins. "Another one of my buyers was looking at condos just a few weeks ago because he didn't think he could afford a single family home, but thanks to the low rates he can now. Homebuyers in every price range are excited, even those looking at homes priced well over $1 million. Unfortunately we are still facing competition on every offer, which leads us to drop contingencies and offer above list price. With the inventory crunch, these low rates are definitely adding to the frenzy."

Despite the drop in mortgage rates expanding the range of homes that buyers can afford, the share of affordable inventory on a $2,500 payment fell 3.6 points in Phoenix, 3.4 points in Las Vegas and 1 point in Orlando from a year ago.

Metro-level data is available in the table below and the complete report and methodology are available at https://www.redfin.com/blog/mortgage-rates-drop-on-coronavirus-fears.

 Share of Homes for Sale Affordable on a $2,500 Monthly Payment

Metro Area

Total Homes for Sale, March 4-10, 2019

Total Homes for Sale, March 2-8, 2020

Share of Homes Affordable on a $2,500 Payment, 2019

Share of Homes Affordable on a $2,500 Payment, 2020

Change in Share of Homes Affordable, 2019 to 2020

Dallas, TX

18,195

15,597

69.6%

75.8%

6.2 pts

Portland, OR

6,335

4,835

49.9%

55.1%

5.2 pts

Richmond, VA

3,244

2,515

76.6%

80.9%

4.3 pts

Milwaukee, WI

4,397

4,276

80.6%

84.8%

4.2 pts

San Diego, CA

7,576

4,889

19.7%

23.7%

4.0 pts

Nashville, TN

11,083

9,983

72.4%

76.1%

3.7 pts

Minneapolis, MN

8,838

8,214

69.6%

73.2%

3.6 pts

New York, NY

35,344

33,128

26.2%

29.7%

3.5 pts

Columbus, OH

5,563

5,206

82.0%

85.4%

3.4 pts

Seattle, WA

6,125

3,841

23.1%

26.2%

3.1 pts

Raleigh, NC

6,742

5,921

74.9%

78.1%

3.1 pts

Louisville, KY

3,057

2,756

84.0%

86.8%

2.9 pts

Chicago, IL

27,981

24,325

71.6%

74.4%

2.8 pts

Denver, CO

7,206

5,498

44.8%

47.7%

2.8 pts

Charlotte, NC

11,513

10,019

77.2%

80.0%

2.8 pts

Miami, FL

20,443

16,650

55.7%

58.4%

2.7 pts

Birmingham, AL

4,751

3,991

84.3%

87.0%

2.7 pts

Houston, TX

28,013

26,255

77.5%

80.0%

2.5 pts

Jacksonville, FL

8,891

7,259

79.2%

81.7%

2.5 pts

Austin, TX

7,426

5,684

69.1%

71.4%

2.3 pts

Hartford, CT

4,882

4,558

86.6%

88.8%

2.2 pts

Providence, RI

5,296

4,433

73.7%

75.9%

2.2 pts

Riverside, CA

18,185

13,082

62.7%

64.8%

2.2 pts

Atlanta, GA

26,234

22,649

76.5%

78.6%

2.1 pts

San Jose, CA

2,325

1,595

2.3%

4.3%

2.0 pts

Kansas City, MO

6,870

4,918

80.7%

82.7%

2.0 pts

Baltimore, MD

10,200

8,640

75.4%

77.2%

1.8 pts

Sacramento, CA

5,060

4,008

49.8%

51.5%

1.7 pts

New Orleans, LA

4,264

4,036

79.9%

81.5%

1.6 pts

San Antonio, TX

9,638

8,671

84.7%

86.2%

1.6 pts

Boston, MA

7,884

7,504

34.0%

35.5%

1.5 pts

Virginia Beach, VA

6,871

5,201

85.3%

86.7%

1.4 pts

Detroit, MI

5,016

4,707

92.1%

93.3%

1.2 pts

Oklahoma City, OK

4,948

4,286

86.0%

87.2%

1.2 pts

St. Louis, MO

8,799

7,167

87.7%

88.8%

1.0 pts

Indianapolis, IN

5,361

4,125

83.2%

84.1%

0.9 pts

Buffalo, NY

1,986

1,585

90.2%

91.0%

0.9 pts

Cincinnati, OH

7,873

6,506

85.8%

86.1%

0.4 pts

Memphis, TN

2,950

2,447

86.2%

86.4%

0.2 pts

Pittsburgh, PA

8,374

7,802

88.0%

87.8%

-0.2 pts

San Francisco, CA

1,686

1,667

1.8%

1.6%

-0.3 pts

Tampa, FL

16,616

11,845

80.5%

80.2%

-0.3 pts

Cleveland, OH

7,960

5,883

89.7%

89.2%

-0.4 pts

Philadelphia, PA

7,033

6,231

81.4%

80.8%

-0.6 pts

Los Angeles, CA

19,772

13,949

19.9%

19.3%

-0.6 pts

Salt Lake City, UT

3,621

1,511

63.4%

62.6%

-0.8 pts

Washington, D.C.

13,321

11,059

55.5%

54.5%

-0.9 pts

Orlando, FL

11,562

8,634

79.7%

78.7%

-1.0 pts

Las Vegas, NV

12,057

8,143

80.8%

77.4%

-3.4 pts

Phoenix, AZ

24,664

15,339

71.5%

67.8%

-3.6 pts

National

883,656

738,139

68.6%

70.5%

1.9 pts

About Redfin
Redfin (www.redfin.com) is a technology-powered real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer's favor. Founded by software engineers, Redfin has the country's #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry's lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 90 major metro areas across the U.S. and Canada. The company has helped customers buy or sell homes worth more than $115 billion.

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 Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

 

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SOURCE Redfin

Redfin Journalist Services: Alina Ptaszynski, 206-588-6863, press@redfin.com