The rate of the increase in home prices has not abated this year. According to the carefully followed S&P CoreLogic Case-Shiller Indices, home prices nationwide rose 19.1% in October.
Among the several reasons for this increase are historically low interest rates (which have ticked up moderately recently) and a desire to move out of expensive coastal cities to ones inland with lower home prices and lower costs of living. Another is that millions of Americans can work from home because of the effects of the COVID-19 pandemic.
Craig J. Lazzara, Managing Director at S&P DJI, pointed out:
We have previously suggested that the strength in the U.S. housing market is being driven in part by a change in locational preferences as households react to the COVID pandemic. More data will be required to understand whether this demand surge represents an acceleration of purchases that would have occurred over the next several years, or reflects a more permanent secular change.
Whatever the reason, the populations of some inland cities have grown because of these relocations. Some modest-sized cities, like Boise, have had sharp increases in the number of residents in the past year. Ironically, that has driven up local home prices. In fact, Boise recently was named the “most overvalued housing market in America.”
Case-Shiller monitors home prices in the 20 largest American markets, which it has done for 27 years. Among the yardsticks it uses is the change of home price over the entire period. Prices in some cities, particularly on the west coast, have tripled. Older industrial cities like Detroit have posted much smaller gains.
The city with the highest price increase in October, compared to October last year, was Phoenix, where it was up 32.3%. The 11th largest city in America, it had an unusually large surge in population between the 2010 and 2020 censuses, up 15.57% to 4,845,832.
These are the 10 markets with the fastest-rising home prices:
- Phoenix (32.3%)
- Tampa (28.1%)
- Miami (25.7%)
- Las Vegas (25.5%)
- Dallas (24.6%)
- San Diego (24.2%)
- Seattle (22.8%)
- Charlotte (22.5%)
- Atlanta (21.3%)
- Denver (20.3%)