Inventory: Affordable Homes Up, Luxury Down
Inventory of affordable homes for sale rose in Q4 of 2021
Sales of the most affordable homes in the U.S. rose 11.3% year over year in the fourth quarter of 2021, according to a new report from Redfin. At the same time, the inventory of for-sale homes in that tier also rose, likely because the end of pandemic-driven mortgage forbearance and foreclosure moratorium policies encouraged more of these owners to sell.
“The market for homes at lower price points is booming for a few reasons. Not only is there demand from workers who are now earning higher wages, but investors, who have an appetite for lower-priced homes, are buying up properties at record rates,” says Redfin Chief Economist Daryl Fairweather. “With the end of both mortgage forbearance and the foreclosure moratorium, many homeowners who don’t have much cash in the bank are choosing to sell their homes to clear their mortgage debt, providing plenty of supply to meet the high demand.”
For luxury homes, a big year-over-year sales drop is partly due to a surge during the fourth quarter of 2020, when affluent Americans took advantage of low mortgage rates and remote work to buy high-end homes. Sales are also constrained by a lack of supply. Luxury sales remain elevated above pre-pandemic levels – up by nearly 27% from the last quarter of 2019 to the last quarter of 2021 – but the initial pandemic-driven frenzy for high-end homes has slowed.
According to the study, the number of luxury listings (median price of $1,038,200) in the fourth quarter of 2021 was down 16.3% year-to-year. However, the number of listings in the lowest tier of “most affordable” rose 18.6% (median $127,500).
While the number of listings in the “affordable” category dropped 1.9% (median $215,600), it’s still smaller than the listing drop of 10.8% for “mid-priced” homes ($310,000) and 14.7% for “expensive” homes (median $470,000).
Still, at 22 days, mid-priced homes spent less time on the market. The most affordable homes spent 28 days, affordable homes spent 24 days, expensive homes spent 26 days and luxury homes were on the market for 39 days.
“Some experts were worried the end of forbearance would cause a glut of housing supply and eventually lead to a housing-market crash, but there’s plenty of demand to snap up the inventory,” Fairweather says. “The fact that both supply and sales of the most affordable homes shot up at the end of 2021 is solid evidence of that.”
Source: “Inventory: Affordable Homes Up, Luxury Down,” Florida Realtors