Home prices have risen sharply in most parts of the United States over the past several quarters. Historically low interest rates have triggered buying power. While part of the population has had jobs wrecked by COVID-19, much of the middle and upper class in America has done well. And the pandemic has driven hundreds of thousands of people from cities to suburbs and even rural areas.
Property information firm CoreLogic recently released a report on the U.S. home market. It measured, among other things, home values in the third quarter of this year, compared with those in 2019. Overall, the value of American homes, what it terms “home equity,” rose $1 trillion over the period, which translates to $17,000 a home.
This gain was the largest since the first quarter of 2014, when the housing market continued to recover from the sharp sell-off of the Great Recession.
Home values and the broader economy can create a virtuous circle as values rise. Frank Martell, president and CEO of CoreLogic, commented, “The housing market has remained a strong pillar in an otherwise tumultuous economic year.” Home buying often triggers home improvement investments. That, in turn, drives more jobs.
The real estate market has not improved evenly across the country. The job situation has gotten worse in some states than in others. The state with the smallest gain in home equity for the period was North Dakota. Sharp drops in oil prices have shaved jobs from the state’s economy. Home equity in the state rose, on average, only $5,400.
The increase in average home equity rose the most in Washington State. According to the research:
States with strong home price growth and high home prices continued to experience the largest gains in equity. This includes Washington, where homeowners gained an average of $35,800; California, where homeowners gained an average of $33,800 and Massachusetts, where homeowners gained an average of $31,200.
While it isn’t entirely clear why these states did so well, each is either affluent or has large cities where many residents live. Additionally, these increases are bound to help their state economies, no matter what the reason.