“In the fourth quarter of 2020, conditions were ripe for house price increases,” said Lawrence Yun, chief economist at the NAR. “Mortgage rates hit rock bottom, boosting demand,” he said. “At the same time, inventory levels also hit record lows, leading to grim inventory conditions of insufficient supply in the fourth quarter.”
This meant that a monthly mortgage payment for a typical single-family home (which is not a new build) increased from $ 1,020 a year ago to $ 1,040, while the family income required to pay for a home increased to $ 49,908, compared to $ 48,960. a year ago.
All regions of the country experienced double-digit price growth year on year. The Northeast had the greatest gains at 21%, followed by the West at 16%, the Midwest at 15%, and finally the South at 14%.
Metro areas with the greatest house price increases were concentrated in the Northeast and Florida, while Idaho and Washington also saw large increases.
The biggest winners were Bridgeport, Connecticut, up 40%; Pittsfield, Massachusetts, up 32%; Atlantic City, New Jersey, up 30%; Naples, Florida, up 30%; Barnstable, Massachusetts, up 29%; Crestview, Florida, up 29%; Boise City, Idaho, up 27%; Binghamton, New York, up 24%; Kingston, New York, up 24%; and Spokane, Washington, up 24%.
Vacation destinations such as Atlantic City, Naples and Barnstable on Cape Cod have been found to be popular, along with more affordable small towns within driving distance of major cities such as Binghamton and Kingston in New York, NAR said.
“Although tourism in general took a major hit in 2020, our data shows that vacation rentals are still doing well in terms of sales,” said Yun. “A lot of people bought in these areas because they got new freedoms from working from home.”
The most expensive area in the country was San Jose, California, with an average sales price of $ 1.4 million. This was followed by San Francisco for $ 1.14 million; Anaheim, California, for $ 935,000; Honolulu, for $ 902,500; San Diego, for $ 740,000; Los Angeles for $ 688,700; Boulder, Colorado for $ 661,300; Seattle for $ 614,700; Nassau County, New York, for $ 591,600; and Boston for $ 579,100.
These most expensive markets all experienced double-digit growth in median sales of existing single-family homes during the fourth quarter, with the exception of Boulder.
Home sellers have seen the benefits of price increases. But these large swings in prices could quickly deter new buyers.
“The average working family is struggling with house prices rising much faster than income,” said Yun. “This puts a consumer on the side of becoming an actual buyer, thereby missing out on amassing wealth from home ownership.”