According to a report from property research firm, Zillow, in 2020, the total home value rose by around $2.5 trillion. The lion’s share of these gains is from the appreciation of existing properties, which was $2.2 trillion. These figures constitute the biggest gain in the U.S. home value since 2005, bringing the value of all homes nationwide to $36.2 trillion. Despite the interruptions and economic turmoil of 2020, the housing market had a remarkable year. With demand still high, many analysts predict that 2021 could be even stronger.
Coming into 2020, demand in the market was strong. Millennials, America’s largest demographic with over 70 million, were encouraged to purchase homes as mortgage rates declined.
When COVID-19 hit in March of 2020, many experts feared the housing market would experience unfavorable conditions. However, these fears proved unfounded as low interest rates and high demand pushed home prices upwards. The rise in home prices to their highest average in five years has left many to comment that the property market seems immune to the pandemic downturn and that this pattern will continue throughout 2021 and beyond.
Related: Why Buying a Home Is Harder for Millennials
California Leading the Way in The Housing Market
More than 20% of the nation’s total housing value is in California. The median home price in the state stands at over $700,000. There are several factors at play here, including high demand. Building a house in California is expensive due to labor and material costs. Additionally, the 1978 ballot initiative, Proposition 13 made development decisions complicated and resulted in difficulties for residential new construction.
All this resulted in an area with high wages and high demand with limited inventory. Prices are so distorted that California’s home value ($7.8 trillion) is worth more than the next three states combined. Additionally, the state of California consists of four of the ten most expensive metro areas: Los Angeles, San Francisco, San Jose, and San Diego.
Lower End of Home Values
At the other end of the scale, three states have the lowest home values compared to other states: North Dakota ($64 billion), Wyoming ($70 billion), and South Dakota ($72 billion). However, their position is not entirely surprising due to the low populations and amount of undeveloped land.
Alaska was the only state to feature a downturn in home values in 2020. The state lost 1.8% in home value, or around $1.5 billion, primarily due to a rapid decline of houses being built in the northwest enclave.
Strong Decade of Home Values
The housing market has performed remarkably over the last decade, with some states experiencing massive surges in total value. Six states saw home values double since 2011. Idaho has the most pronounced increase, with home values shooting up by 149%. Low inventory and increased demand, especially in the Boise Metro Area, are some of the more prominent factors.
Some of the other areas that saw home values double this decade were: Nevada with 146%, Utah with 126%, and Arizona with 116%. Additionally, Washington also saw the total value of its home prices double this decade, with an increase of 108%.
Home Values in The Metro Areas
The New York metro area continues to hold the most home value; however, its once extensive lead is getting smaller. New York home value accounts for $3.1 trillion of the total value of homes in the country, almost one-third, but Los Angeles and San Francisco are catching up with $2.8 trillion and $1.7 trillion, respectively. In 2020, Los Angeles outperformed, with its housing market increasing to $262 billion.
Related: Tampa Among Hottest 3 Housing Markets Predicted for 2021
Marimark Realty
Marimark Realty, a New Tampa Real Estate Agency, focuses on providing a personalized experience for buyers and sellers of real estate. As a full-service real estate agency, we help clients with luxury homes, homes for first-time homebuyers, commercial property, and investment property.
To begin the journey of purchasing or selling your home, or purchasing commercial or investment properties, contact us at your earliest convenience.