Bigger Is Getting Popular But So Is Affordability

The pandemic has awakened homebuyer prospects to want more space for a home office and a yard, so pending sales of large houses are up, but not much more than sales for small- and medium-sized homes.

“Most people would prefer a large home over a small home given the choice,” said Redfin chief economist Daryl Fairweather. “That’s true regardless of what’s happening in the world, although spending more time at home due to the pandemic is encouraging some homebuyers to seek out bigger houses with bigger yards. But affordability still reigns, which is why the market for large homes isn’t much hotter than for smaller homes. The lines are drawn economically.”

The typical home that sold in the four weeks ending August 16 was 3.7% larger (1,772 square feet) than the typical home that sold a year earlier. Compare that with 0.4%, the average year-over-year growth rate from 2015 to 2019. Growth in the size of homes people are buying has accelerated since the onset of the coronavirus outbreak. The typical home that went off the market during a similar time period last year (the four weeks ending August 11, 2019) was 1.7% bigger (1,713 square feet) than the year before.

The price of the typical small home was up 8.1% year over year to $199,900 in July, versus a 7.5% increase to $322,500 for medium-sized homes and a 6.7% increase to $539,000 for large homes. The bigger price increase for smaller homes is likely due to buyers prioritizing affordability. Seventeen percent of homebuyers said the pandemic has caused them to want a less expensive home, according to the aforementioned survey.

Read More