“The fourth quarter of 2020 presented favorable circumstances for increases in house prices,” said Lawrence Yun, chief economist at NAR. “Mortgage rates have hit record lows, thereby increasing demand,” he said. “At the same time, inventory levels have also reached record levels, leading to gloomy supply shortages in the fourth quarter.”
This means that the monthly mortgage payment for a typical single-family home (other than a new construction) has increased to $ 1,040 from $ 1,020 a year ago, while the family income required to pay for a home has 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 biggest gain with 21%, followed by the West with 16%, the Midwest with 15% and finally the South with 14%.
The metropolitan areas with the greatest gains in residential prices were concentrated in the Northeast and Florida, with Idaho and Washington also registering large increases.
The biggest winners were Bridgeport, Connecticut, with a 40% increase; Pittsfield, Massachusetts, up 32%; Atlantic City, New Jersey, up to 30%; Naples, Florida, up to 30%; Barnstable, Massachusetts, an increase of 29%; Crestview, Florida, 29%; Boise City, Idaho, up 27%; Binghamton, New York, 24%; Kingston, New York, 24%; and Spokane, Washington, up 24%.
Vacation destinations like Atlantic City, Naples and Barnstable on Cape Cod appeared to be popular, along with more affordable small towns within walking distance of major cities like Binghamton and Kingston in New York, according to the NAR.
“Although tourism suffered a major blow in general throughout 2020, our data show that holiday homes still performed well in terms of sales,” said Yun. “Many people bought in these areas because they found themselves with the new freedom to work from home.”
The most expensive area in the country was San Jose, California, with an average home selling price of $ 1.4 million. This was followed by San Francisco, with $ 1.14 million; Anaheim, California, at $ 935,000; Honolulu, for $ 902,500; San Diego, for $ 740,000; Los Angeles at $ 688,700; Boulder, Colorado for $ 661,300; Seattle at $ 614,700; Nassau County, New York, at $ 591,600; and Boston at $ 579,100.
All of these more expensive markets recorded double-digit growth in average sales of existing single-family homes during the fourth quarter, with the exception of Boulder.
Home sellers saw the upside of price increases. But these large price fluctuations may soon drive new buyers away.
“The average working family is struggling to cope with house prices that are rising much faster than income,” said Yun. “This prevents the consumer from becoming a real buyer, making him lose the opportunity to accumulate wealth by owning a home.”