Home prices rose in the United States last year, driven by low-interest rates mortgages, people fleeing cities and a middle-class income that was little changed by the COVID-19 pandemic. Across the nation, the average home price in the fourth quarter was up 14.9% from the year before, according to the National Association of Realtors. In almost every one of the 183 markets it tracks, the increases were unprecedented.
Experts from the organization reported, “the fourth quarter of 2020 witnessed home prices grow from a year ago, with 88% of the metro areas seeing double-digit price increases.” The worst off was Huntsville, Alabama, where prices rose only 4% to $252,000.
The market where prices truly surged was the Bridgeport-Stamford-Norwalk metro area, where they rose 39% to $578,000. That market’s homes sit near the highest end of the national price range, which makes the activity all the more impressive.
The increase relies almost entirely on COVID-19-driven flight from New York City. The pandemic drove out tens of thousands of people, many of whom are affluent. The Bridgeport-Stamford-Norwalk area contains some of the nation’s richest cities and towns, particularly Greenwich, Darien and Westport. Each is within a train ride of an hour or less from Grand Central Station, New York City’s train hub.
Bloomberg reported: “With New Yorkers rushing to the suburbs, Fairfield County, Connecticut — the home of tony Greenwich — suddenly has the fastest-rising real estate prices in the U.S.”
As a sign of the affluence of Connecticut in general, more than half the homes sold there went for $750,000 or more, which is nearly three times the median value of an American home. In Greenwich, the prices were much higher. Last month, 66 homes were sold there, up 88%. The median home price reached just above $1.9 million.
According to the Hartford Courant, in a year-end report for 2020 from William Pitt-Julia B. Fee/Sotheby’s International Realty, the residential real estate brokerage showed, “With New York City residents flying to the suburbs in even greater numbers, the data indicates that we’re unlikely to see a lull in the demand anytime soon.” By some estimates, the surge will last through the end of this year.
The news supports the theory that the COVID-19 pandemic has done little to cripple the buying power of the affluent. Most job loss in the economy occurred at the bottom of the income ladder: retailer workers, people who work in bars and restaurants and people in the travel industry. Bankers, hedge fund managers and professionals were more than fine.
The spread of the pandemic may have as much an influence on anything else when it comes to flight to the suburbs near big cities. New York City was not the only large metro with such a migration. It happened also in San Francisco and San Jose, the two most expensive housing markets in America, and home to high-paid tech workers who can work remotely. Many of these residents fled as far as Austin, Texas, and parts of Idaho.
Real estate prices continue to surge in several places, and around New York City there is no sign that will end.