{"id":73756,"date":"2022-01-27T05:00:39","date_gmt":"2022-01-27T13:00:39","guid":{"rendered":"https:\/\/www.redfin.com\/news\/?p=73756"},"modified":"2022-01-26T16:23:38","modified_gmt":"2022-01-27T00:23:38","slug":"luxury-price-tier-report-q4-2021","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/luxury-price-tier-report-q4-2021\/","title":{"rendered":"Sales, Supply Surge For the Most Affordable U.S. Homes as Mortgage Forbearance Ends"},"content":{"rendered":"

As the job market strengthened for lower-wage workers, mortgage forbearance came to an end and investors ramped up purchases, sales and supply rose in the most affordable part of the housing market at the end of last year. Meanwhile, sales of luxury homes fell.\u00a0<\/span><\/i><\/p>\n

Sales of the most affordable homes in the U.S. rose 11.3% year over year in the fourth quarter of 2021, while sales of luxury homes dropped 16.3%.\u00a0<\/span><\/p>\n

That\u2019s according to an analysis that divides all U.S. residential properties into five price tiers\u2014luxury, expensive, mid-priced, affordable and most affordable\u2014based on Redfin Estimates of the homes\u2019 market value. The methodology section at the bottom of this report has more information about how we determined which homes were placed in each bucket.\u00a0<\/span><\/p>\n

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Sales of affordable homes are on the rise as the job market <\/span>strengthens<\/span><\/a>, especially for lower-wage workers, and real estate investors buy a <\/span>record share<\/span><\/a> of U.S. homes. At the same time, inventory in the most affordable price tier is up as the <\/span>end<\/span><\/a> of pandemic-driven mortgage forbearance and foreclosure moratorium policies encourages Americans to put their homes on the market.<\/span><\/p>\n

\u201cThe market for homes at lower price points is booming for a few reasons. Not only is there demand from workers who are now <\/span>earning higher wages<\/span><\/a>, but investors, who have an appetite for lower-priced homes, are buying up properties at <\/span>record rates<\/span><\/a>,\u201d said Redfin Chief Economist Daryl Fairweather<\/a>. \u201cAnd with the end of both mortgage forbearance and the foreclosure moratorium, many homeowners who don\u2019t 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.\u201d<\/span><\/p>\n

For luxury homes, the 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 are still elevated above pre-pandemic levels\u2014sales were up by nearly 27% from the last quarter of 2019 to the last quarter of 2021\u2014but the initial pandemic-driven frenzy for high-end homes is calming down.\u00a0<\/span><\/p>\n

Before the onset of the pandemic in early 2020, sales growth was similar for all five price tiers.\u00a0<\/span><\/p>\n

But as luxury sales increased throughout the second half of 2020, sales of the most affordable homes grew much more slowly as many lower-income Americans lost their jobs and struggled financially.\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n
U.S. Housing Market Summary, Q4 2021<\/b><\/td>\n<\/tr>\n
<\/td>\nLuxury<\/b><\/td>\nExpensive<\/b><\/td>\nMid-Priced<\/b><\/td>\nAffordable<\/b><\/td>\nMost Affordable<\/b><\/td>\n<\/tr>\n
Homes sold, YoY change<\/b><\/td>\n-16.3%<\/span><\/td>\n-9.6%<\/span><\/td>\n-4.8%<\/span><\/td>\n2.8%<\/span><\/td>\n11.3%<\/span><\/td>\n<\/tr>\n
Number of homes for sale (active listings), YoY change<\/b><\/td>\n-21%<\/span><\/td>\n-14.7%<\/span><\/td>\n-10.8%<\/span><\/td>\n-1.9%<\/span><\/td>\n18.6%<\/span><\/td>\n<\/tr>\n
Number of new listings, YoY change<\/b><\/td>\n-7.1%<\/span><\/td>\n-8.3%<\/span><\/td>\n-7.5%<\/span><\/td>\n4.4%<\/span><\/td>\n31%<\/span><\/td>\n<\/tr>\n
Median sale price<\/b><\/td>\n$1,038,200<\/span><\/td>\n$470,000<\/span><\/td>\n$310,000<\/span><\/td>\n$215,600<\/span><\/td>\n$127,500<\/span><\/td>\n<\/tr>\n
Median sale price, YoY change<\/b><\/td>\n17.3%<\/span><\/td>\n15.8%<\/span><\/td>\n18.8%<\/span><\/td>\n16.5%<\/span><\/td>\n10.9%<\/span><\/td>\n<\/tr>\n
Median days on market<\/b><\/td>\n39 (-18 YoY)<\/span><\/td>\n26 (-9 YoY)<\/span><\/td>\n22 (-5 YoY)<\/span><\/td>\n24 (-4 YoY)<\/span><\/td>\n28 (-6 YoY)<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Supply is up for affordable homes, down for luxury homes<\/h4>\n

The number of the most affordable homes for sale rose 18.6% in the fourth quarter, making it the only tier to experience an inventory increase. Supply of luxury homes fell 21% during the same time period, the biggest drop of all five price tiers.\u00a0<\/span><\/p>\n

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The uptick in affordable homes for sale is partly because of owners putting their homes on the market due to the end of mortgage forbearance and the foreclosure moratorium, as discussed above. New listings of the most affordable homes rose 31% year over year in the fourth quarter, while new listings in the other tiers either declined or grew by less than 5%.\u00a0<\/span><\/p>\n

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\u201cSome experts were worried the end of forbearance would cause a glut of housing supply and eventually lead to a housing-market crash, but there\u2019s plenty of demand to snap up the inventory,\u201d Fairweather said. \u201cThe fact that both supply <\/span>and <\/span><\/i>sales of the most affordable homes shot up at the end of 2021 is solid evidence of that.\u201d<\/span><\/p>\n

In the luxury and mid-priced segments of the market, the supply deficit is due largely to a lack of homes hitting the market. New listings of luxury homes for sale fell 7.1% year over year in the fourth quarter, while new listings of mid-priced homes fell by 7.5%.\u00a0<\/span><\/p>\n

Sale prices continued to rise in every segment of the market<\/h4>\n

Sale prices increased by double digits in all five tiers as <\/span>home prices soared<\/span><\/a> throughout the country in response\u00a0 to a shortage of supply and relatively low mortgage rates.\u00a0<\/span><\/p>\n

The median sale price for mid-priced homes jumped 18.8% year over year to $310,000, the biggest increase of all the price tiers. Prices of luxury homes increased 17.3% to about $1 million, while prices of the most affordable homes rose 10.9% to $127,500.\u00a0<\/span><\/p>\n

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Home prices are up significantly in every tier because of strong demand across the board. Price growth for the most affordable homes slowed from the beginning of the year because of the uptick in the number of affordable homes for sale.\u00a0\u00a0<\/span><\/p>\n

Homes are selling faster than a year ago<\/h4>\n

The typical luxury home that was for sale during the fourth quarter spent 39 days on the market, 18 fewer days than a year earlier. The most affordable homes spent less time on the market (28), as is typical for lower-priced homes. That\u2019s six fewer days than the year before.\u00a0<\/span><\/p>\n

The severe supply shortage in the luxury market is one cause of high-end homes picking up speed quicker than their more affordable counterparts. With a major dip in the number of luxury homes for sale, there\u2019s more competition for the ones that are available.<\/span><\/p>\n

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Local highlights, fourth quarter 2021<\/h4>\n

Below are metro-level takeaways for the luxury and most affordable price tiers for the fourth quarter of 2021. We analyzed the 50 most populous U.S. metropolitan areas.\u00a0<\/span><\/i><\/p>\n

Sales<\/strong><\/p>\n