With people seeking more space, sales of large homes grow

Yearning for a little more room at home during the pandemic? Evidently, you’re not the only one.

Nationwide, sales of large homes (3,000 to 5,000 square feet) were up 21% year over year in July as people seek more space amid the ongoing pandemic, according to Redfin. Sales grew nearly 10 times faster for large homes than small ones (300 to 1,500 square feet); small homes grew 2.3% annually in July, while medium-sized home (1,500 to 3,000 square feet) sales were up 10.0%.

Redfin’s pending sales data paints a similar picture. Large homes saw a 16.1% year-over-year pending sales gain, compared with 9% for medium-sized homes and 2.6% for small ones.

“Most people would prefer a large home over a small home given the choice,” said Daryl Fairweather, chief economist at Redfin. “That’s true regardless of what’s happening in the world, although spending more time at home due to the pandemic is encouraging some homebuyers to seek out bigger houses with bigger yards.”

“People want bigger: Bigger houses, bigger properties,” echoed Chriss Houghton, a Redfin agent in Vancouver, Washington. “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.”

Indeed, the typical homes that sold in the four weeks ending August 16 was 3.7% larger than the typical homes that sold during the same time period last year — a sizable jump from the 0.4% average year-over-year growth rate of homes from 2015 to 2019. The average minimum square footage of saved searches by Redfin users in August was 1,864, up from 1,794 square feet in August 2019 and from 1,803 square feet in January.

Additionally, a July Redfin survey of more than 1,000 people planning to buy a home within the next 12 months found that 10% of respondents now want a bigger home. Twenty-one percent indicated that the coronavirus pandemic has prompted them to seek designated work-from-home space, and 21% said it has caused them to want more outdoor or recreational space. Seven percent said they want a designated space for children to learn from home.

So has the pandemic truly spurred the market for large homes to surpass that of smaller ones. In some ways, though Redfin says it’s not by much.

For one thing, prices of smaller properties are still rising faster than those of larger homes. The price of the typical small home in July was $199,900, up 8.1% year over year. For medium-sized homes, it was $322,500, an increase of 7.5%. For large homes, it was $539,000, up 6.7%.

“Affordability still reigns, which is why the market for large homes isn’t much hotter than for smaller homes,” explained Fairweather. “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. 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.”

And while homes of every size sold faster in July than in the same month last year, the typical small home went under contract in 28 days, compared to 34 days for medium-sized homes and 47 for large ones.

Meanwhile, sellers appear to be looking to capitalize on the buyer pool’s growing taste for more space. New listings of large homes were up 7.6% year-over-year in July; small home listings, on the other hand, were down 8.3%, while medium-sized homes retreated 1%. Total home supply was down about 25% annually for each category, but while that reduction is because of the lack of new listings for small and medium-sized homes, the supply decrease for large homes is due to them being bought in larger numbers this year.

“Owners of single-family homes are recognizing it’s a good time to capitalize on demand from people who want more room, both inside and outside, to accommodate all the new things they’re doing at home,” said Jessie Culbert Boucher, a Redfin agent in Seattle. “Some people have been in their large family homes for decades, they’ve been thinking about selling and see that now is a good time.

“Others — and these are definitely not the ones who have lost their jobs during the pandemic — are putting their big houses on the market and taking advantage of low mortgage rates to upgrade into even larger, even nicer homes.”


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