“U.S. Home Values Jump 5% Amid Shortage of Houses for Sale, Total Value Reaches $47.5 Trillion”
The U.S. housing market has seen a significant increase in value, with homes jumping 5% in total value, marking the biggest gain in nearly a year. According to an analysis of the Redfin Estimate for over 90 million U.S. residential properties as of December 2023, the housing market gained $2.4 trillion, reaching a total value of $47.5 trillion.
Affordable East Coast and Midwest metros experienced gains of over 10%, while pricey metros and pandemic boomtowns saw declines in home values. This surge in home values can be attributed to a shortage of homes for sale, causing homeowners to hold onto their properties due to low mortgage rates they secured in recent years. This limited supply has resulted in increased competition among buyers, driving up values.
Despite sluggish housing demand due to elevated mortgage rates and affordability challenges, home values continue to rise. Factors contributing to this trend include the low supply of homes for sale, a rebound from low home values experienced a year ago, and an increase in new construction.
While urban areas have seen a 3.6% increase in home value, suburbs and rural areas have experienced larger gains of 5.6% and 6.3%, respectively. The shift to remote work during the pandemic has led to a preference for suburban and rural living, driving up home values in these areas.
Metros close to but more affordable than major cities like New York City have seen the largest jumps in home value, while pricey metros and pandemic boomtowns have experienced declines. This trend reflects the increasing demand for affordable housing as buyers seek out regions where they can afford to purchase a home.
Overall, the housing market in the U.S. continues to be robust, despite challenges related to affordability and supply. The analysis indicates that while homeowners are benefiting from increased property values, prospective buyers are facing obstacles in entering the market. As the housing market evolves, experts predict a potential decline in mortgage rates before the end of 2024, offering some relief to buyers amidst the current affordability crisis.
