{"id":72982,"date":"2021-07-30T06:00:34","date_gmt":"2021-07-30T13:00:34","guid":{"rendered":"https:\/\/www.redfin.com\/news\/?p=72982"},"modified":"2021-07-29T11:56:48","modified_gmt":"2021-07-29T18:56:48","slug":"real-estate-price-tier-report-q2-2021","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/real-estate-price-tier-report-q2-2021\/","title":{"rendered":"Prices of the Most and Least Expensive U.S. Homes Are Surging the Fastest"},"content":{"rendered":"

Luxury-home prices soared 26% year over year in the second quarter, while prices of the most affordable homes grew 19%. Both segments outpaced the rest of the market.<\/span><\/i><\/h2>\n

The median sale price of U.S. luxury homes jumped 25.8% year over year in the second quarter, while the median sale price of the country\u2019s most affordable homes rose 18.7%. By comparison, prices of mid-priced and affordable homes grew just 16% and 13.2%, respectively.<\/span><\/p>\n

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That\u2019s according to an analysis that divided all U.S. residential properties into five price tiers\u2014luxury, expensive, mid-priced, affordable and most affordable\u2014based on <\/span>Redfin Estimates<\/span><\/a> of the homes\u2019 market values. When we refer to a \u201crecord\u201d in this report, the record dates back to the year 2013. It\u2019s important to note that year-over-year gains may appear especially large due to the housing-market slowdown in the second quarter of 2020, when activity stalled due to pandemic restrictions.<\/span><\/p>\n

U.S. Housing Market Summary, Second Quarter 2021<\/span><\/h3>\n\n\n\n\n\n\n\n\n
<\/td>\nLuxury<\/b><\/td>\nExpensive<\/b><\/td>\nMid-Priced<\/b><\/td>\nAffordable<\/b><\/td>\nMost Affordable<\/b><\/td>\n<\/tr>\n
Median sale price<\/b><\/td>\n$1,025,000<\/span><\/td>\n$455,000<\/span><\/td>\n$290,000<\/span><\/td>\n$198,200<\/span><\/td>\n$108,000<\/span><\/td>\n<\/tr>\n
Median sale price, YoY change<\/b><\/td>\n25.8%<\/span><\/td>\n18.2%<\/span><\/td>\n16%<\/span><\/td>\n13.2%<\/span><\/td>\n18.7%<\/span><\/td>\n<\/tr>\n
Homes sold, YoY change<\/b><\/td>\n88.2%<\/span><\/td>\n44%<\/span><\/td>\n30.5%<\/span><\/td>\n38.4%<\/span><\/td>\n56.8%<\/span><\/td>\n<\/tr>\n
Number of homes for sale (active listings), YoY change<\/b><\/td>\n1.3%<\/span><\/td>\n-5.4%<\/span><\/td>\n-7.1%<\/span><\/td>\n0.7%<\/span><\/td>\n11.3%<\/span><\/td>\n<\/tr>\n
Median days on market<\/b><\/td>\n30 (-34 days YoY)<\/span><\/td>\n16 (-25 days YoY)<\/span><\/td>\n14 (-19 days YoY)<\/span><\/td>\n17 (-17 days YoY)<\/span><\/td>\n25 (-17 days YoY)<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u201cHome prices and sales plummeted at the beginning of the pandemic, but have now more than recovered\u2014especially in the luxury and most affordable price tiers\u2014due to low mortgage rates and strong homebuyer demand during the pandemic,\u201d <\/span>Redfin Chief Economist <\/span>Daryl Fairweather<\/span><\/a> said.\u00a0<\/span><\/p>\n

Fairweather continued: \u201cSurging prices can be especially problematic for first-time and lower-income homebuyers, but the good news is that the supply of the country\u2019s most affordable homes is growing. That means there could be more homes to choose from and less competition for buyers in that segment of the market.\u201d<\/span><\/p>\n

While luxury home prices have been on the rise, sellers in the high-end market have started to slash prices in recent weeks, according to Boise, ID<\/a> Redfin real estate agent <\/span>Kristin Lopez<\/span><\/a>.<\/span><\/p>\n

\u201cI\u2019m starting to see price drops for homes in the $600,000 to $800,000 range,\u201d Lopez said. \u201cSome sellers are pricing their properties too high because they think the market can sustain the red-hot dynamic we\u2019ve seen over the past year. Homes below $400,000 are still selling like hotcakes, as locals compete with out-of-towners who have moved to Boise because they can now work remotely.\u201d<\/span><\/p>\n

Home Sales Rise Fastest in Luxury and Most Affordable Tiers<\/span><\/h3>\n

Purchases of luxury homes in the U.S. surged 88.2% year over year in the second quarter, while purchases of the most affordable homes rose 56.8%. By comparison, purchases of homes in other price tiers increased between 30% and 45%.<\/span><\/p>\n

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Home sales have soared across the board during the pandemic as Americans have taken advantage of low mortgage rates and the flexibility to work from anywhere. But sales in the luxury and most affordable price tiers have seen especially large increases. For luxury homes, that\u2019s partly because affluent Americans have reaped the gains of a strong stock market and <\/span>swelling savings accounts<\/span><\/a>. For the most affordable homes, it\u2019s likely due in part to a rebound in investor activity. Home purchases by real estate investors\u2014who commonly buy lower-priced properties\u2014<\/span>jumped<\/span><\/a> to a record high in the second quarter.<\/span><\/p>\n

\u201cWith the pandemic eviction moratorium coming to an <\/span>end<\/span><\/a> and many Americans priced out of homeownership, investors are keen on buying up inexpensive properties and turning them into rentals,\u201d Fairweather said. \u201cA relative abundance of homes hitting the market in both the most affordable and luxury tiers has also enabled purchases in these segments to flourish.\u201d<\/span><\/p>\n

Supply Crunch is Less Intense in Bottom and Top of the Market<\/span><\/h3>\n

The number of homes for sale in the most affordable price tier rose 11.3% year over year during the second quarter. The next-biggest increase was in the luxury tier, which saw supply grow 1.3%. Supply in the remaining three tiers either declined or grew less than 1%.<\/span><\/p>\n

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\u201cThe government\u2019s pandemic mortgage forbearance program is coming to an end, which is likely boosting the supply of America\u2019s most affordable homes,\u201d Fairweather said. \u201cSome homeowners are putting their properties on the market because they\u2019re concerned about being foreclosed upon when forbearance dries up, while other owners of affordable homes are selling because they want to avoid the increase in seller competition that\u2019s likely to occur when forbearance ends.\u201d<\/span><\/p>\n

Homes Across Price Tiers Are Selling Faster\u2014But Especially Luxury Homes<\/span><\/h3>\n

Historically, luxury homes have taken much longer to sell than homes in other price tiers, but the gap has narrowed during the pandemic\u2014likely due to increased competition for high-end homes that offer space and privacy.<\/span><\/p>\n

The typical luxury home that was for sale in the second quarter spent 30 days on the market\u201434 fewer days than the same period in 2020. The most affordable homes spent 25 days on the market, 17 fewer days than a year earlier. Homes in the remaining three price tiers spent about two weeks on the market and also sold faster than they did in 2020.<\/span><\/p>\n

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Local Highlights, Second Quarter 2021<\/span><\/h3>\n

Below are the most interesting metro-level takeaways for the second quarter. We analyzed the 50 most populous U.S. metropolitan areas. Scroll down to see a full table including all five price tiers.<\/span><\/i><\/p>\n

Prices<\/strong><\/p>\n