According to a new report from Redfin, the total worth of all U.S. homes hit a record $46.8 trillion in June 2023 topping the previous high of $46.6 trillion set one year ago. Over the last year, the market picked up 0.4%, or $166.2 billion in value, and 19.1%, or $7.5 trillion, from two years prior. The housing market has now offset the $2.9 trillion decline in value—set off by rising mortgage rates—that occurred from June 2022 through February 2023.
“The dominance of the 30-year fixed rate mortgage in America is propping up home values,” said Redfin Economics Research Lead Chen Zhao. “Tons of homeowners scored an incredible deal during the pandemic: a 3% mortgage rate for the remainder of their 30-year loan. Now they’re staying put because moving would mean taking on a rate that’s twice as high. This means buyers who are in the market now are duking it out for a very small pool of homes, preventing home values from plunging.”
About 9-in-10 homeowners now have a mortgage with a rate under 6%, which is nearly a full percentage point below today’s average rate of 6.96%. As a result, just 1% of homes have changed hands this year, the lowest number in at least a decade. The number of homes for sales in the U.S. dropped 15% year-over-year to an all-time low in June, the biggest annual decline in nearly two years.
Of the 32 major metropolitan areas where average home values declined from a year earlier in June, 11 of those cities are in Texas. The value of homes in Austin, Texas fell 9.6% year over year to $388.1 billion in June—a larger decline than any other metro. Next came Oakland, California (-8.7%), Seattle (-8.1%), San Francisco (-7.8%) and Los Angeles (-6.6%). Rounding out the top 10 are San Jose, California, Phoenix, Oxnard, California, Las Vegas, and Sacramento, California.
The pricey West Coast markets have experienced outsized declines because they were among the first to be one of the most expensive markets in the U.S. at the outset of the pandemic. Scores of remote workers left these areas during the pandemic in search of more space and better bang for their buck, contributing to the drop in value. Additionally, the West Coast has been hit hard by tech layoffs. Many buyers in pricey coastal markets also got sticker shock after seeing the impact of elevated mortgage rates on paper; in a metro like San Francisco, a higher rate can equate to a monthly housing bill that’s thousands of dollars more expensive.
Situations are similar in other pandemic boomtowns as home values are overheated, leaving those who want to get into the market priced out. Values surged in Sun Belt metros including Austin, Phoenix and Las Vegas because scores of remote workers moved in. Now, home values in those areas are coming back down to earth.
“Occasionally, a special house will get multiple offers, but that’s not the norm in Austin anymore,” said local Redfin Premier real estate agent Carmen Gioia. “Buyers are shopping but taking their sweet time, in part because there’s so much inventory. I’m warning my sellers that it could take a few weeks to sell, even if their home is priced well.”
In dollar terms, Los Angeles saw the biggest decline in aggregate home value, posting a $152.6 billion year-over-year decline in June. It was followed by Oakland, California (-$85.8 billion), Seattle (-$82.7 billion), Phoenix (-$58.4 billion) and San Francisco (-$57.5 billion).
However, according to Redfin, homes in relatively affordable markets posted the biggest gains in home values. The value of homes in Little Rock, Arkansas climbed 8.8% year over year to $63.7 billion in June—a bigger increase than any other metro. Next came Camden, New Jersey (8.7%), Milwaukee (8.5%), Wilmington, Delaware (8.5%), Bridgeport, Connecticut (8.3%), Greenville, South Carolina (7.8%), Hartford, Connecticut (7.6%), Charleston, South Carolina (7.2%), Greensboro, North Carolina (7.2%) and Columbia, South Carolina (7.1%).
In dollar terms, Atlanta saw the biggest jump in aggregate home value, posting a $40.1 billion year-over-year increase in June. It was followed by Boston ($33.4 billion), Miami ($30.3 billion), New Brunswick, New Jersey ($22.6 billion) and Montgomery County, PA ($21.4 billion).
On other news proffered by Redfin, the total value of U.S. homes owned by Millennials rose by 2.9% year-over-year to $5 trillion in the first quarter of 2023; a bigger increase than any other generation. That is the second quarter in a row that Millennials have held more value than the Silent Generation, on a revised basis. The value of homes owned by the Silent Generation fell 11.4% to $4.7 trillion. Meanwhile, the value of homes owned by Generation X dropped 0.7% to $13.4 trillion, and the value of homes owned by Baby Boomers was flat, at $18 trillion.
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