People are looking for bigger houses as they seek space to live and work during the pandemic, based on a report from brokerage firm Redfin.
Homebuyers are searching for bigger houses in July, when sales rose by 21.2% year-over-year nationwide, compared with 10% for medium-sized homes and 2.3% for small homes.
The regular house that sold in the four weeks ending August 16 was 3.7% larger (1,772 square feet) than the regular home that sold a year earlier, according to the real estate report. That reflects a contrast with the 0.4% average year-over-year growth rate from 2015 to 2019.
According to Redfin, it split single-family homes into small (300-1,500 square feet), medium-sized (1,500-3,000 square feet) and large (3,000-5,000 square feet).
“People want bigger: Bigger houses, bigger properties,” Chriss Houghton, a Redfin agent in Vancouver, Washington, was quoted as saying in the report. “That’s what people are asking for, whether their idea of big is a half-acre, one acre or 10 acres. If people are living in a small cookie-cutter home right now, they want a larger house with extra rooms and a dedicated place for an office,” he said.
Homebuyers are now more than willing to trade location for space, Los Angeles Redfin agent Amy Black was quoted as saying in the report. “People are realizing it doesn’t make sense to live in the center of Santa Monica in a cramped townhouse when the kids are home and the parents are working from home,” Black said.
Based on a Redfin survey in July, more than 1,000 people are planning to purchase a house within the next 12 months, 21% of homebuyers said the pandemic motivated them to seek designated space to work from home, and 21% said it made them want more outdoor or recreational space.
In addition, 10% wanted a bigger house and 7% said they need a designated space for children to learn from home.
However, there has been an increase in the prices of small and medium-sized homes, compared with large homes, Redfin said. This is because buyers prioritize affordability. Meanwhile, the price of the typical small house rose by 8.1% year over year to $199,900 in July, versus a 7.5% increase to $322,500 for medium-sized houses and a 6.7% increase to $539,000 for big homes.
According to Redfin chief economist Daryl Fairweather, most people want a big home over a small home given the choice, regardless of the situation outside.
“Spending more time at home due to the pandemic is encouraging some homebuyers to seek out bigger houses with bigger yards,” he was quoted as saying.
“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 people with steady work-from-home jobs are able to move away from city centers, or even to entirely different parts of the country, and find more space for a similar price,” he noted. “But a lot of people searching for homes are in less advantageous financial situations and can’t afford more space even if they want it.”
Houses of all sizes sold faster than last year in July, with small and medium-sized houses being sold faster than large ones, Redfin said. Fairweather stressed the sales of large homes may continue to be strong because builders are pacing with the increase in demand for more space.