The U.S. Housing Market shows no sign of slowing down after a record-setting year. According to a new Zillow analysis, the housing market gained about $2.5 trillion in value last year. It was the most in any single year since 2005. The full stock of the market is now worth $36.2 trillion.
Demand for housing was already strong going into the year with elder millennials reaching first-time home-buying age and mortgage rates hovering near record lows. Many Americans faced unprecedented economic hardship because of the pandemic while others with a stable income were motivated to enter the housing market. The desire for housing was also prompted by widespread shift to remote work due to the covid-19 pandemic. Houses were flying off the market at the fastest pace Zillow has recorded.
“Builder confidence, perhaps in reaction to the boosted demand, hit record highs and more homes are being built as a result,” said Zillow economist Treh Manhertz. “Add that together and you see why the housing market gained more than in any year since the Great Recession.”
More than a fifth of the country’s housing value resides in California, according to Zillow. Homes in that state are worth a cumulative $7.8 trillion, more than the next three states combined. California boasts four of the 10 metro areas with the highest total housing value– Los Angeles, San Francisco, San Jose, and San Diego.
Three of the least populated states, North Dakota, Wyoming and South Dakota, have the smallest shares of the U.S. housing market at $64 billion, $70 billion and $72 billion respectively. The only state where the housing stock lost value in 2020 was Alaska at $1.5 billion, down 1.8%.
Zillow found that over the past decade, the total value of the housing stock has more than doubled in six states. Idaho leads them, having gained 149% since 2011. Much of that state’s growth is due to the Boise metro area, which has tripled in value during that time. It’s the most of any of the 100 largest U.S. metros. The other states seeing their housing market value double over the past decade were Nevada (146.3%), Utah (126.2%), Arizona (116.5%), Colorado (111.6%) and Washington (108%).
“The housing market continued to hold stronger than expected throughout the last months of 2020 and despite increases in infection rates across the country,” said Selma Hepp, deputy chief economist at data analytics provider CoreLogic. “With mortgage rates steadily falling through the end of the year and buyers realizing that the pandemic is still far from over, robust demand was not fazed by traditional seasonal slowdown. And given that we are unsure of when social interaction will be safe again, homebuyers will continue to compete for fewer and fewer homes available for sale, which will drive home prices higher.”
Zillow expects 2021 to be even stronger, possibly exceeding last year’s $2.5 trillion gain.