A year ago — when COVID-19 was something happening somewhere else, the Millennial generation was aging into prime first-time home-buying age, and mortgage rates were at record lows — the housing market was poised for a robust 2021.
When the pandemic hit and Americans shifted from in-office to remote work, the shift "prompted many to reevaluate their housing options and supercharged demand," according to researchers at Zillow, as outlined in its 2020 housing market report.
Zillow expects bigger growth in 2021 as sustained demand pushes home values higher. A few other highlights from the report follow:
- The full U.S. housing stock gained about $2.5 trillion in value last year, including $2.2 trillion from appreciation of existing homes and $274 billion from new construction.
- That $2.5 trillion gain is more than in any year since 2005 in what was a remarkably strong year for housing, and 2021 is likely to be stronger.
- More than a fifth of the total housing value in the U.S. and almost half of the 10 most valuable metros are in California. Homes in California are worth a cumulative $7.8 trillion, more than the next three states combined, and the state boasts four of the 10 metro areas with the highest total housing value — Los Angeles, San Francisco, San Jose, and San Diego.
"2020 was a record-breaking year for the housing market with intense competition among buyers driving up home prices," said Zillow Economist Treh Manhertz. "While many faced financial hardships because of the pandemic, others fortunate enough to maintain stable income took a step back to contemplate what they wanted their home to be and hopped on Zillow to help find a place that filled their wish list. Builder confidence, perhaps in reaction to the boosted demand, hit record highs and more homes are being built as a result. Add that together and you see why the housing market gained more than in any year since the Great Recession."
Micro-locally, New York's metro area, at $3.1 trillion total, still holds the most housing value, though Los Angeles, at $2.8 trillion, and San Francisco, at $1.7 trillion, are catching up, according to Zillow.
"Seven metros gained more value than New York in 2020, reducing the gap at the top of the list," Zillow noted. "The value of Los Angeles' housing stock grew the most last year, up $262 billion -- that's more than the total value of homes in Las Vegas, Orlando, and Nashville, to name a few."
More details are available on Zillow.com.