Home buyers are looking for large houses during the pandemic, as they are looking for more space to work.
But the price of small houses has risen more than that of large houses, as home buyers are focusing on affordability.
The search for large houses has been increasing annually for nearly five years now.
In the midst of the pandemic, home buyers are looking for bigger houses than small ones. According to a new report from Redfin, typical houses sold in a month to August 16 were 3.7% larger (1,772 square feet) than those sold a year earlier.
This compares to an annual average of 0.4% for the period 2015 to 2019. Worldwide sales of large homes rose 21% year over year in July. Sales to large households grew almost ten times faster than sales to small and medium sized households. However, the price increase was higher for medium and small homes.
Small house prices rose 8.1% year-on-year in July, while medium house prices rose 7.5% and large house prices 6.7%.
This was said by the Redfin’s Chief Economist, Daryl Fairweather:
“Most people would prefer a big house to a small house if they had the choice. This is true no matter what happens in the world, although the fact that they are spending more time at home due to the pandemic is encouraging some home buyers to look for larger homes with larger plots of land.
Fair weather added,
“But affordability still rules, which is why the market for large houses is not much hotter than for smaller houses. The boundaries are being drawn economically. People who have a permanent home office can move from city centers or even to completely different parts of the country and find more space at a similar price. But many people who are looking for a home are in a less advantageous financial situation and cannot afford more space even if they want it”.
According to the report, in August the number of searches for large homes by home buyers and real estate investors rose from 1,803 in January to 1864. The search for large homes has now been increasing annually for nearly five years.
According to Chriss Houghton, a Redfin agent in Vancouver, Washington,
“People want bigger: bigger houses, bigger plots of land. That’s what people want, whether their idea of big is half an acre, a hectare or 10 acres. If people live in a small house now, they want a bigger house with extra rooms and a separate place for an office.
Stronger price increase in the small and medium houses than in the big houses
The price of small homes rose 8.1% year-on-year to $199,900 in July, compared to a 7.5% increase to $322,500 for medium homes and a 6.7% increase to $539,000 for larger homes.
It is more likely that the price increase for small homes was small, as buyers put affordability first. It’s also important to note that 17% of home buyers said the current pandemic is making them more desirable, cheaper homes.
More people are planning to buy large houses than small houses in the next 12 months.
House buyers are willing to trade location for space.
According to Los Angeles Redfin agent Amy Black,
“People realize that it doesn’t make sense to live in a cramped townhouse in downtown Santa Monica when the children are at home and the parents work from home.
More than a thousand people plan to buy a house in the next 12 months; 21% of buyers want bigger houses because the pandemic has led them to idealize larger spaces that are designed for work and for their children to learn more from home.