Redfin revealed that prices of affordable homes in America have risen 5% during the pandemic.
It appears that low mortgage rates have attracted more buyers to jump into the market, throwing their hats—and home bids—into the ring recently. This increased in buyer interest and activity is especially seen in the niche of first-time buyers. This increase in demand, coupled with the still-present supply shortage of homes for sale—has driven prices of the most affordable homes in the nation up 5% (year over year) just within the short time window from May 31 until now. In contrast, the home prices for the most expensive homes in the U.S. merely saw an increase of 2%.
This uptick in housing prices—even amid the economic crunch that is currently being felt by the COVID-19 pandemic—makes perfect sense, as demand is only growing with so many Americans struggling to procure affordable housing for their families. The decrease in those seeking more expensive homes likewise comes as no surprise, as the current state of instability and so many unknowns on the horizon is leading Americans to tighten their purse strings and play it much safer when it comes to their budgets. The decrease in personal incomes of Americans due to the recent rise in unemployment also plays a factor in the quest and increased demand for affordable housing.
Pam Henderson, a Redfin agent in Dallas, commented on the increased interest in affordable housing amid this pandemic era: “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.”
Henderson added: “With mortgage rates at record lows and remote work on the rise, some renters are having an epiphany: They could buy a lower-priced home in the suburbs for close to what they’re paying in rent.”
Redfin Lead Economist Taylor Marr also commented on the current state of housing affairs: “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 who are in search of lower-cost houses. Many Americans—especially millennials—were already toying with the idea of buying their first house before the pandemic. Now they’re actually taking the plunge because mortgage rates are so low and it’s less attractive to live in a small apartment right next to the office.”