Across the United States, the pandemic has not proven to be a deterrent to the kind of record-high home value growth we’ve been seeing for several years now. According to the latest data from property analytics provider CoreLogic, annual inventory dropped 24 percent below 2019 levels while home values rose 1 percent between November and December 2020.
On average, home prices grew by 5.7 percent each month in 2020 (compared to 3.8 percent growth in 2019), even if a slight dip came among fears and uncertainty surrounding the pandemic in April.
But the high demand for housing coupled with low inventory throughout the country have now come together to create a market that is extremely competitive but particularly challenging for anyone looking to buy or make the leap to homeownership for the first time.
“At the start of the pandemic, many braced for a Great Recession-era collapse of the housing market,” Frank Martell, president and CEO of CoreLogic, said in a statement. “However, market conditions leading into the crisis — namely low home supply, desire for more space and millennial demand — amplified the rapid acceleration of home prices.”
All 10 of the biggest cities in the country saw their home prices increase while states like Idaho, Indiana and Maine saw even higher growth of 19.1, 16.1 and 15.2 percent, respectively.
Multiple factors have come together to create the current situation — record-low mortgage rates are pushing many to want to buy quickly even while inventory shortages are fueling high prices and competition.
To top it off, many homeowners are holding off on selling in the hopes of seeing their home values growth further. This could, CoreLogic warns, result in an affordability crisis for anyone looking to buy for the first time and a stalled market for everyone.
“Two record lows are fueling home price gains: for-sale inventory and mortgage rates,” Dr. Frank Nothaft, chief economist at CoreLogic, said in a statement. “Prospective sellers with flexible timetables have opted to delay listing their home until the pandemic fades or they are vaccinated. We can expect more inventory to come available in the second half of the year, leading to slowing in price growth toward year-end.”