Q4 Report: Home prices increase across the board
Home prices have grown in every metro area tracked in 2020’s fourth quarter. In fact, 88% of the areas tracked (161 out of 181 metros) have seen double-digit price increases. This is a jump not only from last year, but from last quarter as well. In 2020’s Q3, only 115 metro areas recorded growth in the double digits.
“The fourth quarter of 2020 presented circumstances ripe for home price increases,” said Lawrence Yun, National Association of Realtors® (NAR’s) chief economist, pointing to the combination of low mortgage rates and low inventory.
“Mortgage rates reached record lows, thereby driving up the demand,” Yun explains. “At the same time, inventory levels also reached record lows, leading to grim inventory conditions of insufficient supply in the fourth quarter.”
Where are we seeing the highest price growth?
Experts note that many of the cities that have recorded the highest price gains are either national destination sites or small towns within driving distance from major cities—illustrating the demand for both vacation homes and affordable homes throughout the pandemic.
The areas with the highest price gains across the country were as follows:
- Bridgeport, Conn. – 39.2%
- Pittsfield, Mass. – 32.2%
- Atlantic City, N.J. – 30.0%
- Naples, Fla. – 29.9%
- Barnstable, Mass. – 28.9%
- Crestview, Fla. – 28.6%
- Boise City, Idaho – 27.1%
- Binghampton, N.Y.—24.4%
- Kingston, N.Y. – 24.2%
- Spokane, Wash. – 23.6%
“Although tourism took a major hit overall throughout 2020, our data shows that vacation housing still did well in terms of sales,” Yun said. “Many people purchased in these areas because they found themselves with new work-from-home freedoms.”
The 10 most expensive metros in Q4 included:
- San Jose, Calif. – $1.40 million
- San Francisco, Calif. – $1.14 million
- Anaheim, Calif. – $935,000
- Urban Honolulu, Hawaii – $902,500
- San Diego, Calif. – $740,000
- Los Angeles, Calif. – $688,700
- Boulder, Colo. – $661,300
- Seattle, Wash. – $614,700
- Nassau, N.Y. – $591,600
- Boston, Mass. – $579,100
With all four major regions experiencing double-digit price growth, the national median for existing single-family home prices increased by 14.9% from last year to $315,900.
Existing single-family home prices:
- Northeast: up 20.7% from last year
- West: up 15.5% from last year
- Midwest: up 15.1% from last year
- South: up 14.0% from last year
The trouble with rising home prices
Yun warns that while home sellers have benefited from Q4 price increases, these increasing prices have the potential to prohibit many Americans from entering the market. “The average, working family is struggling to contend with home prices that are rising much faster than income,” he said. “This sidelines a consumer from becoming an actual buyer, causing them to miss out on accumulating wealth from homeownership.”
While record-low mortgage rates are helping to make monthly mortgage payments affordable for buyers, with the national average for a 30-year fixed mortgage rate dropping to 2.81% in 2020’s fourth quarter (compared to the previous year’s 3.76%), the average monthly mortgage payment still rose from $1,020 in 2019 to $1,040 in 2020.
Source: https://www.nar.realtor/newsroom/all-metro-areas-saw-home-prices-rise-during-fourth-quarter-of-2020