Residential Real Estate News
U.S. Housing Hits Record Setting $47 Trillion in Total Value in June
According to national property broker Redfin, the total worth of U.S. homes hit a record $46.8 trillion in June 2023. This overtakes the prior all-time high of $46.6 trillion set a year earlier, as a shortage of homes for sale propped up housing values.
The value of U.S. homes rose 0.4% ($166.2 billion) from a year earlier in June and 19.1% ($7.5 trillion) from two years earlier. 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."
Roughly nine in 10 homeowners with mortgages have a mortgage rate under 6%, which is nearly a full percentage point below today's 6.96% average. As a result, just 1% of the nation's homes have changed hands this year--the lowest share in at least a decade. The number of houses for sale in the U.S. dropped 15% year over year to an all-time low in June, the biggest annual decline in nearly two years.
West Coast Tech Hubs, Pandemic Boomtowns Saw Biggest Drops in Home Value
There are 32 U.S. metropolitan areas where aggregate home value declined from a year earlier in June, bucking the national trend. Eleven of those 32 are in California and seven are in Texas. This analysis includes the 100 most populous metro areas for which there was sufficient data.
The value of homes in Austin, TX fell 9.6% year over year to $388.1 billion in June--a larger decline than any other metro. Next came Oakland, CA (-8.7%), Seattle (-8.1%), San Francisco (-7.8%) and Los Angeles (-6.6%). Rounding out the top 10 are San Jose, CA, Phoenix, Oxnard, CA, Las Vegas and Sacramento, CA.
Pricey West Coast markets like San Francisco and Seattle have experienced outsized declines because they're among the most expensive markets in the nation, meaning home values had more room to fall. 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.
The situation is somewhat similar in pandemic boomtowns; home values overheated, leaving many people 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 (-$85.8 billion), Seattle (-$82.7 billion), Phoenix (-$58.4 billion) and San Francisco (-$57.5 billion).
Relatively Affordable Markets Posted the Biggest Gains in Home Value
The value of homes in Little Rock, AR climbed 8.8% year over year to $63.7 billion in June--a bigger increase than any other metro. Next came Camden, NJ (8.7%), Milwaukee (8.5%), Wilmington, DE (8.5%), Bridgeport, CT (8.3%), Greenville, SC (7.8%), Hartford, CT (7.6%), Charleston, SC (7.2%), Greensboro, NC (7.2%) and Columbia, SC (7.1%).
Home values in these areas didn't overheat nearly as much as they did in places like Phoenix and San Francisco during the pandemic, meaning they have room to rise. In a majority of the 10 aforementioned markets, the typical home still sells for below the national median of $426,056. That's likely bolstering homebuyer demand, because fewer people are priced out.
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, NJ ($22.6 billion) and Montgomery County, PA ($21.4 billion).
Millennials Now Hold More Home Value Than the Silent Generation
The total value of U.S. homes owned by millennials rose 2.9% year over year to $5 trillion in the first quarter of 2023--the most recent period for which generational data is available--a bigger increase than any other generation. That's 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.
The Silent Generation has lost home value as many of its members have passed away or moved into retirement homes. Millennials have gained value because they're in prime homebuying age, which means they're purchasing substantially more homes than they were in recent years. Millennials now make up the biggest piece of the homebuying pie, purchasing roughly 60% of homes bought with mortgages over the last several years.
Interestingly, Millennials have lost home equity. Millennial home equity declined 18.2% year over year in the first quarter--a bigger decline than any other generation.
Home Values Held Up Better in Suburbs and Rural Areas Than in Urban Areas
The total value of homes in urban areas fell 0.9% year over year to $10.2 trillion in June. Meanwhile, the value of homes in the suburbs rose 0.2% to $29.1 trillion and the value of homes in rural areas increased 2.6% to $7.4 trillion.
The suburbs came back into vogue during the pandemic while cities fell out of favor--largely due to the shift to remote work and the housing affordability crisis. While cities have bounced back to some extent as employers have asked workers to return to the office, many Americans still work remotely, incentivizing homebuying in far-flung, affordable areas.
Homes Worth Between $250,000 and $750,000 Saw Biggest Jump in Value
The total value of homes worth between $500,000 and $750,000 increased 4.1% year over year in June, and those worth between $250,000 and $500,000 saw a 4% gain. By comparison, homes worth between $2 million and $5 million experienced a 7.4% drop in value, and homes worth between $1 million and $2 million saw a 2.6% decline.
Many of the country's high-end homes are located in pricey West Coast markets, which have seen outsized drops in home value. The luxury housing market has also been hit especially hard - particularly in the Bay Area and Seattle - as recession fears and high home prices have caused consumers to shy away from luxury goods.
