The supply of affordable homes in the U.S. rose 13% year-over-year (YOY) in Q3, increasing at a record pace of 1.6% YOY, according to a Redfin report.
The report suggests the increase in affordable homes is due to forbearance programs ending, forcing many owners of low-cost homes to put them on the market.
As forbearance programs launched in reaction to the Covid-19 pandemic come to a close, many homeowners are putting those houses on the market. More than 450,000 homeowners have exited forbearance plans in the first two weeks of October.
“The end of forbearance has forced many lower-income Americans to put their homes up for sale and become renters,” said Redfin Chief Economist Daryl Fairweather.
“This has caused the number of affordable homes on the market to surge, helping replenish inventory amid an acute housing shortage. It’s a rainstorm after a long drought, but the drought isn’t over yet.”
Housing supply remains historically low, with 78,000 affordable listings in Q3 2021 compared to more than 100,000 in the third quarters of 2013 through 2016.
Housing construction has been a major player in the current housing affordability crisis. Freddie Mac estimated the U.S. is short 3.8 million housing units. But while construction is in demand, labor shortages and supply chain problems have inflated prices.
The price of lumber hit an all-time high of more than $1,500 per thousand board feet in May and, though it dropped slightly over the summer, it’s rising once again. The National Association of Homebuilders (NAHB) has asked the Biden administration to focus on labor and construction materials in its efforts to increase affordable housing.
Washington is trying to mitigate the lack of housing under $200k by expanding affordable housing programs. Freddie Mac announced plans to offer at least $3 billion in Single-Family affordable housing bonds. The bonds are intended to boost homeownership, especially in low-income markets.
The luxury and “expensive” home markets tumbled in Q3, however. The supply of expensive and luxury homes dropped by 17.9% and 21.2%, respectively, both record-setting declines. There were 158,000 luxury listings in Q3 2021, the fourth-lowest level on Redfin’s record dating back to 2013.
The luxury market experienced a surge during the pandemic, with many markets seeing record-breaking sales. In Hawaii, high-end sales outpaced 2020 in both transactions and total dollar value.
A report from Hawaii Life noted that the sales were “fueled by new wealth and high net-worth individuals.”
“We are seeing a younger and more motivated group of buyers who view luxury real estate as an asset class,” the report reads. “They are diversifying into new business models and flexible working locations that weren’t available previously. There’s a newfound velocity of both money and people.”