2021 may be the year when U.S. home prices were the hottest both in terms of prices and total homes sold. There are several reasons. Among them are historically low mortgage rates (which have risen modestly recently). Another is newly found mobility for many Americans. Yet another is a migration from expensive coastal cities like New York and San Franciso to cities where home prices and the cost of living are lower.
Americans have become more mobile to some large extent because of one effect of the COVID-19 pandemic. Millions of people who had to work at offices, now work at home for safety reasons. Some companies have made “work from home” permanent. Others have created hybrid work environments where people split their time between offices and their homes. Once again, people in the mobile workforce have often relocated to cities where home prices are low, and the perceived “quality of living” is higher. This has driven up demand in cities which include Phoenix, Las Vegas, and Boise.
Ironically, the migration has driven up home prices in these less expensive cities as the buying population has surged.
Realtor.com produces the “2021 Monthly Housing Market Trends Report.” The November edition has just been released. The reseach report shows several trends, one of which is how increasing purchases have dropped the number of homes available for sale. The national inventory of unsold homes dropped 26% from November last year. New home listings dropped .7% over the same period.
Demand drove up prices, and drove down how long homes for sale stayed on the market. The median lisitng price of homes nationwide was $379,000, up 8.6% from last year. The number of days homes were on the market was only 47, down by 10 days from last year. Perhaps more telling, they dropped 23 days compared to Novermber 2019.
Homes in the south were on the market for a much lower number of days than in November last year. In Miami, days spent on the market dropped by 32 to 59, in Raleigh by 24 to 34, and in Orlando by 18 to 43.
Medium sized cities (compared to LA and New York City) away from the coasts saw the largest price increases in median listing prices. They rose 31.7% in Austin to $550,000, 30.2% in Las Vegas to $444,800, and 24.6% in Tampa $378,000. Still these prices are modest. None came close to matching San Jose at $1.245 million, San Franciso at $984,000, or New York at $655,000.