Residential real estate has had a record-breaking year with the Covid-19 pandemic pushing U.S. home buyers to look for more space, while mortgage rates fell to record lows.
The total value of U.S. homes was up 10% in January, almost a year after the World Health Organization declared Covid-19 a pandemic last March, according to a report Monday from Redfin. Residential real estate across the country was worth $32.4 trillion in January, compared to $29.3 trillion for the same time in 2020, according to the report.
The median price for a home was $330,500 in January, a 14.3% year-over-year increase, the data showed. That marks the biggest yearly rise since at least 2013.
Sales of luxury properties, the top 5% of listings, spiked 45% during the three months ending Jan. 31, compared to the same time period the previous year, the data showed.
Meanwhile, expensive homes, those which fall in the top 65% to 95% of the market, saw a 25% year-over-year jump over the same three months.
The market for second homes has also skyrocketed, jumping 84% year over year in January, Redfin found. The increase in demand for primary homes rose 36% in the same time period.
At the same time, inventory is at record lows, Redfin found. Supply—already constrained before the pandemic—was down 23.6% in January, compared with a year ago. The ability to work from home and low mortgage rates were key factors in the decline, and the shortage of homes has resulted in rising prices and market shifts toward more affordable, smaller metro areas.
Inventory is so low that it has even been tough to get in to see homes at all,” Danielle Parent, a Redfin real estate agent in Cleveland, said in the report. “It’s a very, very challenging market for buyers, so I’m telling my clients that they should always have second- and third-choice homes in mind and may want to consider making offers sight unseen.”
The lack of supply has also meant bidding wars are on the rise. Around 58% of offers handled by Redfin agents had to contend with other bids in January, up from 53% in December. January marked the ninth consecutive month with more than half of offers facing competition, according to the report.
Article Source: Mansion Global