When the experts said everyone should stay at home and social distance during this pandemic there was one thing they weren’t keeping in mind.
Not everyone has a nice, big home.
Many people live in small, cramped apartments that they pay too much for, and others need to work as hard as they can to pay off high-pressure mortgages that aren’t going to take a break for a virus.
One of the most significant economic events in years is now being reported as home prices have had their biggest rise in over a decade and a half.
Americans want homes badly and the market reflects that, with massive house price rises across the nation.
How Much Have Home Prices Gone Up?
Home prices in February were up 12% from last February, and home prices overall went up the most they have in 15 years. The main thing driving this increase is simple: there isn’t a big supply and there is a huge demand.
This causes bidding competitions and prices keep rising. People want homes and they want them now.
According to the S&P CoreLogic Case-Shiller home price index “the 10-city composite rose 11.7% annually, up from 10.9% in January. The 20-city composite gained 11.9%, up from 11.1% in the previous month” and “all the gains were in the double digits, except Chicago and Las Vegas.”
These are huge numbers and a red-hot housing market means that you are going to be paying more for a home if you’re looking to buy.
“The National Composite’s 12% gain is the highest recorded since February 2006, exactly 15 years ago, and lies comfortably in the top decile of historical performance,” explained managing director and global head of index investment strategy at S&P DJI Craig Lazzara.
The massive hikes in February prices were especially driven by rising home prices in San Diego, Phoenix and Seattle. If you’re moving to these cities be prepared to pay a pretty penny!
Indeed, prices went up 17.4% this year in Phoenix, 17% in San Diego and 15.4% in Seattle.
Prices are still going up in spite of rising mortgage rates which shows just how red-hot this market is. If you are currently selling property you are in a prime position, let’s put it that way.
The average rate of a 30-year fixed mortgage went from 2.79% to 3.27% in February alone, which shows that the rising home demand is putting mortgage rates up as well.
Over 50% of homes that were sold in February ended up having bidding wars, which is a hugely important statistic and something to look out for if you’re in the market to buy (you might not be alone in your interest in a home or property, and the price could go up a lot from a bidding war).
In addition, the average time taken to sell a home in America is about half as much in 2021 as it was in 2020, which is a massive increase. People especially want homes with many rooms and a nice, spacious yard. With more time at home comes more focus on the home and finding a nice one in a good neighborhood.
“This demand may represent buyers who accelerated purchases that would have happened anyway over the next several years. Alternatively, there may have been a secular change in preferences, leading to a permanent shift in the demand curve for housing,” said Lazzara.
The housing boom continues with US Home Prices hitting all-time highs again, up 12% over the past year. This is the highest rate of increase since 2006. pic.twitter.com/xS0b01BgC6
— Charlie Bilello (@charliebilello) April 27, 2021
How are home prices in your area? Are you in the market to buy or sell? What do you think about Lazzara’s point of view?