The increase in sales of affordable homes is being linked to a strengthening job market, especially for lower-wage workers. Redfin also reported that real estate investors were buying a record share of homes in the U.S. during the fourth quarter of 2021, which helped to boost the inventory for homes in the most affordable tier.
The report also revealed that inventory improved drastically for the most affordable priced homes as mortgage forbearance and foreclosure moratoriums came to an end. According to Redfin, the end of this period propelled some homeowners into listing their homes for sale.
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, according to the report. The supply of luxury homes declined by 21% during the same time period, the biggest drop of all five price tiers. That being said, the report does note that luxury home sales are still above pre-pandemic levels, with sales being up nearly 27% in Q4 2021 compared to Q4 2019.
“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,” said Redfin chief economist Daryl Fairweather. “And 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.”
“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 said. “The fact that both supply and sales of the most affordable homes shot up at the end of 2021 is solid evidence of that.”
