MReport January 2022

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50 | M REPORT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Remote Work Shifts Buying Habits in 2021 As workers increasingly can work online, people have fled the cities—and set a number of housing market records along the way. T he housing market in 2021 was nothing short of re- markable as it seemingly could not be stopped from rising; even the low points of the year were record breaking. As the economy restarted and began to shake off the pandemic cobwebs, people's habits began to change. Due to remote work, people shifted their focus away from the typically busy city centers and to the suburbs and beyond. There was even record demand for second homes at a time when inventory was at an all-time low. But as the year draws to a close, Redfin looks back on how the pandemic shaped the market. "The ongoing pandemic, includ- ing its seismic effect on the U.S. economy and the way Americans live and work, has made 2021's housing market anything but typi- cal," Redfin Chief Economist Daryl Fairweather said. "Remote work, low mortgage rates, a shortage of building materials, and wealth inequality that has allowed an influx of affluent Americans to buy vacation homes, to name just a few factors, have come together to create a historic year for real es- tate. Buyers paid more for homes, bought sooner than they planned, searched outside their hometowns, or all of the above. This year's frenzied housing market has been one for the books—but it may become more balanced in 2022." According to Redfin, the top records that were broken over the course of last year were ranked as follows: Record #1: The typical U.S. home sold for nearly $400,000 "The national median home-sale price hit $386,000 in June, an all-time high and up 24.4% year over year. The median sale price may hit another all- time high before the end of the year. U.S. home prices have been growing by double digits all year, thanks to low inventory and high demand. Prices are much higher than they were pre-pandemic in just about every part of the country." Record #2: Home supply dropped to its lowest level in history "There were just 1.38 mil- lion homes for sale in June on a seasonally adjusted basis. That's an all-time low and down 23% year over year. The U.S. is in a housing-supply shortage for a combination of reasons: A lack of new construction, surging demand from buyers, and home- owners taking advantage of low mortgage rates to refinance rather than sell, to name a few." Record #3: The typical home sold in just 15 days "The typical home that sold in both June and July was on the market for just 15 days. That's the lowest median days on market in history and down from 39 days in June 2020. The speed of the market is due partly to the supply crunch, which has led buyers to pounce on homes as soon as they're listed for sale, often with- out even seeing them in person." Record #4: Over 60% of homes went off the market in two weeks "Speaking of a fast market, 61.4% of homes that went under contract in March had an ac- cepted offer within two weeks of hitting the market, an all-time high." Record #5: More than half of homes sold above list price "Of homes that sold in June, 56.5% went for above list price. That's a record high and up 29.6 percentage points from a year earlier. The average home sold for 2.6% above list price in June, another record high. Homes sell- ing above list price is typically due to bidding wars, which were commonplace this year: Nearly three-quarters of offers written by Redfin agents in April, for instance, encountered competition from another potential buyer." Record #6: Mortgage rates dropped to 2.65% "The average 30-year fixed mortgage rate hit 2.65% the week ending January 7, 2021, the lowest of all time. Low mortgage rates are one reason for this year's homebuying frenzy, which has ultimately resulted in the supply shortage and surging prices." Record #7: Investors pur- chased nearly 1 in 5 of all homes bought in the U.S. "Real estate investors bought 18.2% of homes that were pur- chased in the U.S. during the third quarter of 2021. That's a record-high share and up from 11.2% a year earlier. In dollar terms, investors bought a record $63.6 billion worth of homes over that period, up from $35.7 billion a year earlier. Many individual homebuyers have found it tough to compete with investors, just one factor that has made the housing market tough for buyers this year." Record #8: Demand for sec- ond homes nearly doubled from before the pandemic "Homebuyer demand for second homes was up 91% from pre-pandemic levels in January, marking record growth. Demand for vacation homes soared as re- mote work took hold in mid-2020, leaving many affluent white- collar workers with the ability to work from beach houses and ski chalets." Record #9: Nearly one-third of Americans looked to move to a different metro area "In another side effect of the surge in remote work, 31.5% of users looked to move to a different metro area in the first quarter of 2021, an all-time high and up from 26% from a year earlier. That's partly due to remote workers moving to relatively af- fordable areas in search of larger homes, more outdoor space and sunny weather." Record #10: The typical luxury home sold for 25% more than the year before The median sale price of U.S. luxury homes jumped 25.8% year over year to $1,025,000 in the second quarter of 2021, mark- ing record price growth. That's compared with 16% year-over-year growth for mid-priced homes and 13.2% growth for affordable homes. Price growth for luxury homes outpaced that of more afford- able homes partly due to affluent Americans reaping the benefits of the year's strong stock market, gains in home equity and remote work.

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