Redfin’s report released on Thursday, August 8, revealed that currently, there are 8 cities in the United States with housing markets valued at over $1 trillion, doubling from 4 cities last year, highlighting how rapidly housing prices are rising. Additionally, the report pointed out a significant increase in housing prices in Asian communities.
According to the report, Chicago, Phoenix, Washington DC, and Anaheim, California joined New York, Los Angeles, Atlanta, and Boston this year, becoming U.S. cities with housing market values exceeding $1 trillion. San Diego and Seattle followed closely, with housing market values of approximately $987 billion and $971 billion respectively.
The report analyzed Redfin’s valuation estimates of over 95 million residential properties in the United States in June 2024, revealing a staggering $31 trillion increase in the total value of U.S. residential properties compared to last year, reaching a record high of $49.6 trillion.
With supply still surpassing demand, housing values are pushed higher. Redfin economist Chen Zhao stated in the report, “The value of the U.S. real estate market is likely to surpass the $50 trillion mark in the next 12 months, as there isn’t enough inventory to drive prices down.”
During the pandemic, many households and remote workers took advantage of low borrowing rates to upgrade their living spaces, leading to a surge in housing prices. Subsequently, the Federal Reserve’s aggressive rate hikes to combat inflation resulted in a significant increase in monthly costs for new mortgage holders.
The report indicated a 6.6% annual increase in the total value of the U.S. real estate market. The total value of U.S. homes has more than doubled over the past decade, rising nearly 120% from around $22.7 trillion in June 2014.
If prices continue to grow at a similar pace, San Diego and Seattle are likely to join the ranks of the aforementioned 8 trillion-dollar cities in the next 12 months.
It is worth noting that while San Francisco’s housing market value is only around $700 billion, adding nearby Oakland and San Jose in California’s Bay Area brings the total housing market value close to $2.5 trillion. Similarly, the total value of the Dallas-Fort Worth metropolitan area surpassed $1 trillion, with Dallas at $734 billion and Fort Worth at $294 billion.
Redfin stated that only one city saw a decline in housing values: Cape Coral, Florida experienced a 1.6% decrease in housing market value last year, while the growth rates in New Orleans and Austin were also below 2%.
Overall, Asian communities saw the largest increase in housing market value, rising by 9% to reach $1.4 trillion. Following a decline in 2022-2023, Asian-majority community housing values rebounded in the past 12 months, increasing by 9% to $1.4 trillion. The increase in value was driven by rising home prices in West Coast cities, where many Asian communities are located.
In contrast, housing values in predominantly White communities grew by 6.6% to reach $39.4 trillion, while predominantly Black community housing values increased by 5.4% to $1.4 trillion. Hispanic community housing values mostly increased by 6.4% to $2 trillion.
Compared to urban and suburban housing, rural housing values in the U.S. saw the fastest growth. There are approximately 57 million housing units in the suburbs, 22 million in urban areas, and 21 million in rural areas.
Rural housing values surged by over 7% annually, reaching $7.8 trillion. Urban housing values grew by 6% to reach $10.3 trillion, while suburban housing values exceeded $30 trillion for the first time, increasing by 6.8% to $30.1 trillion.
The soaring prices have made existing homeowners feel unprecedentedly wealthy. However, for prospective buyers, the rapid rise in prices is discouraging. According to a Gallup survey conducted in May, only 21% of Americans believe that now is a good time to buy a home.
Nevertheless, with the possibility of a Fed rate cut in September, mortgage rates have recently decreased. Although the Federal Reserve does not directly set mortgage rates, its actions impact the overall borrowing costs in the economy.
However, Redfin economist Chen Zhao estimates that this might further drive up housing prices.
“Mortgage rates have started to decline, but many potential sellers and buyers are waiting on the sidelines, meaning we may continue to see a pattern of slow price appreciation,” she said. “This is good news for millions of American homeowners seeing their assets grow, but first-time buyers will continue to struggle to find affordable homes.”
(Reference: CNN report)