A new Redfin report on the value of the U.S. housing market shows a $2 trillion annual gain. In percentage terms, the total value of U.S. homes rose 5% over the last 12 months, marking the biggest increase in almost a year.
The housing shortage has plenty to do with that. But some metros—most notably affordable East Coast and Midwest markets—are seeing home values rise by wider margins, while pricier metros and pandemic boomtowns are reporting year-over-year declines.
The U.S. housing market has grown in value by $2.4 trillion over the past year, raising its total value to $47.5 trillion.
Those figures are based on an analysis of the Redfin Estimate for over 90 million residential properties as of December 2023, showing a total value increase of 5.3% since December 2022, marking the biggest year-over-year value increase in 11 months. The total value of U.S. homes is also up 13.3% ($5.6 trillion) compared to two years ago.
1. The housing shortage—Many homeowners hesitate to put their homes on the market because they’re currently locked into significantly lower mortgage rates, contributing to a drop in listings and fewer options for buyers, which drives up values for both existing homes for sale and future listings.
2. Home values hit a low close to a year ago—At the end of 2022, the total value of the U.S. housing market neared a trough, which is partly why year-over-year growth at the end of 2023 was more significant. Home values typically cool in the winter months, but they slowed to an abnormal degree in 2022 as buyer demand froze in the face of skyrocketing mortgage rates.
3. Homebuilders kept building—While the U.S. deals with a housing shortage, builders continue to build homes to breach the gap. That increase in construction contributes to last year’s overall gain in value for the U.S. housing market.
Redfin’s analysis covers about 96 million homes for this report—up from 95 million as of December 2022 (thanks to new construction).
Metros with the highest total value of homes:
1. New York, NY – $2,428,001,729,845 ($2.43T)
2. Los Angeles, CA – $2,123,633,948,287 ($2.12T)
3. Atlanta, GA – $1,225,840,689,554 ($1.23T)
4. Boston, MA – $1,196,065,333,764 ($1.2T)
5. Anaheim, CA – $1,129,813,280,414 ($1.13T)
6. Washington, D.C. – $1,022,618,617,532 ($1.02T)
7. Chicago, IL – $990,942,727,610 ($991B)
8. San Diego, CA – $987,570,269,408 ($988B)
9. Phoenix, AZ – $987,464,661,663 ($987B)
10. Seattle, WA – $911,245,138,957 ($911B)
America’s homeowners are sitting pretty. They’re holding a massive amount of housing wealth, despite lackluster demand from buyers, because home values skyrocketed during the pandemic and now a supply shortage is preventing those values from falling. Prospective buyers aren’t as lucky. The combination of elevated mortgage rates, high home prices and a limited pool of homes for sale means homeownership is about as unaffordable as ever. One bright spot for buyers is that mortgage rates should start declining before the end of 2024. Chen Zhao - Redfin Economics Research Lead
In December 2023, the average U.S. home had a value of $495,183—up from $474,740 one year earlier.
Of course, not every homeowner has seen an increase in their home’s market value. The average U.S. home value climbed over $500,000 in both the summer of 2023 and the summer of 2022. So, some buyers who bought between those summers saw their home values dip.
That’s how seasonality works; home values typically peak in the summer and trough in the winter. So, some decline between seasonal peaks is to be expected.
RELATIVELY AFFORDABLE METROS CLOSE TO NYC POST LARGEST VALUE JUMPS; MIDWEST ALSO SEES AN UPTICK IN HOME VALUES
