“The fourth quarter of 2020 presented ripe circumstances for rising house prices,” said Lawrence Yun, chief economist at NAR. “Mortgage rates have hit record lows, increasing demand,” he said. “At the same time, inventory levels also hit record lows, leading to grim inventory supply conditions in the fourth quarter.”
This meant that a monthly mortgage payment for a typical single-family home (which is not a new construction) rose to $ 1,040 from $ 1,020 a year ago, while the family income needed to afford a home rose at $ 49,908, compared to $ 48,960 a year ago.
All regions of the country have seen a double-digit increase in prices from year to year. The Northeast had the highest gain at 21%, followed by the West at 16%, the Midwest at 15% and finally the South at 14%.
The subway areas with the largest increases in house prices were concentrated in the Northeast and Florida, Idaho and Washington also recorded large increases.
The biggest winners were Bridgeport, Connecticut, up 40%; Pittsfield, Massachusetts, up 32%; Atlantic City, New Jersey, up 30%; Naples, Florida, up 30%; Barnstable, Massachusetts, up 29%; Crestview, Florida, up 29%; Boise City, Idaho, up 27%; Binghamton, New York, up 24%; Kingston, New York, up 24%; and Spokane, Washington, up 24%.
Holiday destinations, such as Atlantic City, Naples and Barnstable on Cape Cod, appear to be popular, along with smaller towns more accessible from major cities such as Binghamton and Kingston in New York, according to NAR.
“Although tourism has been a major success overall during 2020, our data show that holiday homes continued to perform well in terms of sales,” Yun said. “A lot of people bought in these areas because they woke up with new job freedoms at home.”
The most expensive area in the country was San Jose, California, with an average home sale price of $ 1.4 million. San Francisco followed with $ 1.14 million; Anaheim, California, for $ 935,000; Honolulu, at $ 902,500; San Diego, at $ 740,000; Los Angeles for $ 688,700; Boulder, Colorado at $ 661,300; Seattle at $ 614,700; Nassau County, New York, at $ 591,600; and Boston for $ 579,100.
These most expensive markets saw a double-digit increase in median single-family home sales in the fourth quarter, with the exception of Boulder.
Home sellers have seen rising prices. But these large price increases could soon stop new buyers.
“The average working family is struggling to fight housing prices that are growing much faster than incomes,” Yun said. “This prevents a consumer from becoming a real buyer, causing them to miss the accumulation of wealth from home ownership.”