Home sales, and prices, are at unprecedented levels for several reasons. Among them, mortgage rates sit near all-time lows, which makes homeownership more affordable. The incomes of upper-class and middle-class Americans were, for the most part, not affected by the pandemic, which has allowed them to remain in the market for homes. The pandemic did trigger a migration of people from large coastal cities to those that are more affordable. As more people work from home, their ability to have homes where they want to live, rather than where they have to live, has improved.
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The migration has helped to lift home prices nationwide, although it varies from place to place. The carefully followed S&P CoreLogic Case-Shiller Indices for June show the national average home price rose the most on record. It was up 18.6% from the same period a year ago. The information is also broken down by America’s largest cities:
The 10-City Composite annual increase came in at 18.5%, up from 16.6% in the previous month. The 20-City Composite posted a 19.1% year-over-year gain, up from 17.1% in the previous month.
Prices rose the most in Phoenix (29.3%), San Diego (27.1%) and Seattle (25.0%). Yet, Phoenix median home prices are lower than in the large west coast cities of San Francisco, San Jose and Los Angeles.
Phoenix already was growing before the current housing boom. According to the Census Bureau, it was among the fastest-growing large metropolitan statistical areas in America. Between 2010 and 2020, its population rose 15.57% to 4,845,832. It is now the 11th largest city in America.
The surge in real estate prices and the total number of home sales may have started to slow. A drop in inventory and prices that have risen so fast that they are out of reach for many buyers are causes for this slowdown. In theory, people who wanted to relocate because of the pandemic probably already have. Additionally, homebuilders have come up against high prices for materials needed to build houses. Their chances to make large profits, therefore, have declined.
June prices, amazingly strong, may not be repeated.
Click here to see the most expensive cities in which to buy a home.
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