SEATTLE, Dec. 22, 2021 /PRNewswire/ -- (NASDAQ: RDFN) — U.S. homeowners gained $9.1 trillion of housing value over the past year as housing prices continued to climb amid a severe shortage of homes for sale, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. The value of U.S. homes surged 31.4% year over year to a total of $38.3 trillion last month, far outpacing the 9.7% ($2.6 trillion) annual increase seen the prior November.
Home prices have skyrocketed during the pandemic as record-low mortgage rates, remote work and a soaring stock market have fueled a swell in homebuyer demand amid an ongoing housing shortage. November marked the 16th-straight month of double-digit price gains, while the number of homes for sale sunk to a record low.
"The surge in housing values during the pandemic has widened the gap between homeowners and renters in America. Homeowners have seen their wealth increase significantly over the past year, while renters have missed out on those gains and are now grappling with rent inflation," said Redfin Chief Economist Daryl Fairweather. "The silver lining is that housing values didn't just climb in large affluent cities. Homeowners in rural America, who don't normally see substantial home-value increases, also reaped the benefits of a booming housing market."
Rural Home Value Soars 46%, Outpacing Cities and Suburbs
The value of rural homes rose 46.2% year over year to a total of $4.9 trillion in November. By comparison, the value of urban homes increased 31.3% to $8 trillion and the value of suburban homes climbed 25.9% to $24.1 trillion.
While cities have been bouncing back from a coronavirus slowdown, rural areas remain more popular than they were before the pandemic as remote workers continue to seek extra space and relative affordability.
Condos See 43% Jump in Value, Rebounding After Pandemic Slump
The value of condos climbed 42.7% year over year to $5.1 trillion in November. By comparison, the value of single-family homes rose 30.1% to $32 trillion and the value of townhouses increased 20.6% to $1.2 trillion.
The pandemic hit the condo market hard in 2020, with scores of Americans exchanging cramped urban life and shared amenities for bigger homes in the suburbs and rural areas. But as lockdown restrictions eased and the initial shock of the pandemic faded, condos and city life began to make a comeback. This explains why condo values saw a relatively large year-over-year gain.
Housing Value Surges Most in Migration Hot Spots Including Austin and Phoenix
The value of homes in Austin, TX surged 48.1% year over year to $389.5 billion in November—the largest gain among the 50 most populous U.S. metropolitan areas. It was followed by Jacksonville, FL (39.9%) and Phoenix, AZ (38.3%). Tampa, FL and Riverside, CA rounded out the top five, with increases of 36% and 32%, respectively.
Homebuyers have flocked to Sun Belt states during the pandemic as remote work has allowed them to prioritize affordability over proximity to the office. Austin, Phoenix and Tampa have consistently been among the hottest spots for homebuyers looking to relocate during the pandemic.
Out-of-towners moving to Austin tend to pay more for homes than locals, which has boosted housing prices in the metro overall as people from more expensive cities like San Francisco and New York have moved in. A July Redfin report found that the typical home purchased by out-of-towners in Austin sells for $470,000, versus $447,500 for locals.
With home prices surging across the Sun Belt, Fairweather predicts homebuyers will increasingly start moving to more affordable northern cities like Indianapolis, IN, Columbus, OH and Harrisburg, PA.
Millennials Reap 34% Gain in Home Value—More Than Other Generations
The value of homes owned by millennials grew 34.3% year over year ($1.2 trillion) to a total of $4.6 trillion in the third quarter—the most recent period for which data was available. Millennials have taken up an increasing share of the U.S. housing market as they've grown into homeowning age, accounting for more than half of new mortgages last year. Many of them bought their first home in 2020—when housing values began to skyrocket—which meant they saw significant wealth gains during their first year of homeownership.
American Indian and Alaskan Native Neighborhoods See 72% Jump in Home Value
The value of homes in neighborhoods that are majority American Indian and Alaskan Native rose 72.3% year over year in November, more than any other race Redfin analyzed. By comparison, majority white neighborhoods saw a 30.4% increase and majority Black neighborhoods experienced a 26% gain. Meanwhile, Hispanic or Latino neighborhoods saw 24.4% growth and Asian neighborhoods experienced a 22% gain.
"Many of the American Indian and Alaskan Native areas that saw large home-value increases are rural and/or in Arizona, a reflection of pandemic-driven migration to more affordable, spacious towns," Fairweather said. "This is a boon for minority homeowners in these places, but poses a threat to renters who could get priced out due to gentrification."
High-Fire Risk Homes Are Worth 42% More Than a Year Ago
The value of homes in areas with high fire risk rose 42.1% year over year to a total of $1.8 trillion in November. By comparison, the value of homes in areas with high flood, storm, heat and drought risk climbed about 30%.
Many high-fire risk areas are also hot spots for second homes, which have been in high demand during the pandemic as affluent Americans have sought respite from city life.
To read the full report, including charts and additional metro-level highlights, please visit: https://www.redfin.com/news/real-estate-home-value-surge-november-2021
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, instant home-buying (iBuying), rentals, lending, title insurance, and renovations services. We sell homes for more money and charge half the fee. We also run the country's #1 real-estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can take an instant cash offer from Redfin or have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 6,000 people.
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.
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SOURCE Redfin
