When COVID-19 cases first began to rise in the U.S. in early spring, many industry experts began to keep an eye on the effects the pandemic would have on the housing market, specifically urban versus suburban inventory. As consumers learned more information about the novel coronavirus and how it is spread, dense, urban city centers became less popular with homebuyers, while rural and suburban areas saw increased demand.
As the coronavirus has changed the neighborhoods that Americans are choosing to call home, so too has it changed the types of homes that are currently in demand. According to recent surveys, an estimated 42 percent of U.S. workers are now working from home, and this has directly impacted home prices. As these individuals reckon with a semi-permanent state of remote work and school, larger homes with additional bedrooms are outpacing smaller homes in terms of price.
Leveraging data from its Daily Home Price Flash, Black Knight’s Collateral Analytics recently analyzed single-family home (SFH) data from several major counties across the U.S., focusing on the price spread between home prices by bedrooms.
Dating back to 2000, the data shows that the gap between the cost of three- and four-bedroom homes has historically been consistent. However, since March 2020, larger homes have begun to vastly outperform their smaller counterparts in the market.
In particular, home prices in Westchester County, New York, and Miami-Dade County show a clear picture of the increased demand for more living space.
In Miami-Dade, the average price for three-bedroom homes in the first quarter of 2020 was just under $400,000. These homes are now priced at around $450,000, which represents a 12.5% increase. Meanwhile, four-bedroom homes were priced around $516,000 in Q1, and now have an average price of $594,000, a 15% increase.
We also see this trend in Westchester County, NY, where the average price for three-bedroom homes jumped from $610,000 to $700,000 from Q1 to Q3 2020, a 14.75% increase. Four-bedroom homes are now 18% more expensive versus in the first quarter of 2020. The difference between two- and four-bedroom homes is even more pronounced; there has been just a 13.78% increase in two-bedroom home prices since Q1.
This suggests that the preference for larger homes is a reality for many American families as they begin to adjust to the new reality of virtual work and school.
Black Knight’s Collateral Analytics will provide bimonthly snapshots of home sales and price information for major U.S. markets via this blog.